Global stocks end down, US yields up as investors assess Fed path

Global stocks end down, US yields up as investors assess Fed path

The pan-European STOXX 600 index closed up 0.14 per cent and MSCI’s gauge of global stocks shed 0.59 per cent. — Reuters pic

Tuesday, 15 Nov 2022 8:44 AM MYT

NEW YORK, Nov 15 ― A gauge of global stocks ended lower yesterday in choppy trade and US bond yields rose as investors assessed comments from Federal Reserve officials to try and determine the central bank’s path of rate hikes.

Equities rallied last week and US Treasury yields tumbled after consumer price data indicated stubbornly high inflation may finally be starting to slow and give the Fed room to dial back its tightening policies, pushing MSCI’s gauge of stocks across the globe to its biggest weekly percentage gain in two years.

But on the heels of the equity rally, Federal Reserve Governor Christopher Waller said on Sunday that though the central bank may consider slowing the pace of rate increases at its next meeting, that should not be taken as a “softening” in the fight to bring down inflation, and while the data was “good news” it was “just one data point.”

Stocks briefly erased early losses and turned higher, while bond yields moved off earlier highs after Vice Chair Lael Brainard said yesterday the central bank would likely slow its interest rate hikes soon, but emphasised the Fed still had more work to do.

“There is still a sensitivity to Fed speak… One was a little hawkish, one was a little dovish,” said Eric Kuby, chief investment officer at North Star Investment Management Corp.

On Wall Street, the S&P 500 fell after recording its biggest weekly percentage gain since June last week, led by declines in real estate and consumer discretionary shares. Amazon.com fell 2.28 per cent after reports the online retailer is planning to cut around 10,000 jobs in corporate and technology roles.

The Dow Jones Industrial Average fell 211.16 points, or 0.63 per cent, to 33,536.7, while the S&P 500 .SPX lost 35.68 points, or 0.89 per cent, to 3,957.25 and the Nasdaq Composite dropped 127.11 points, or 1.12 per cent, to 11,196.22.

The pan-European STOXX 600 index closed up 0.14 per cent and MSCI’s gauge of global stocks shed 0.59 per cent.

Investors will get another look at inflation when the US producer price index is released on Tuesday, while a slew of Fed officials are scheduled to speak this week.

Benchmark 10-year notes were up 4.2 basis points to 3.871 per cent from 3.829 per cent late on Thursday. The bond market was closed for the Veterans Day holiday on Friday.

The two-year yield was up 8 basis points at 4.406 per cent, from 4.326 per cent.

In contrast, dovish comments from European Central Bank policymaker Fabio Panetta and Cypriot policymaker Constantinos Herodotou helped send European bond yields lower, although short-dated rates remained near multi-year highs hit recently.

Germany’s 2-year government bond yield, was up 0.2 basis points at 2.118 per cent from 2.116 per cent, after climbing to 2.252 per cent last week, its highest since 2008.

After its biggest weekly percentage drop since March 2020 last week, the dollar index rose 0.122 per cent as the greenback relinquished earlier gains, with the euro down 0.23 per cent to US$1.0328.

US-listed Chinese stocks gained on reports regulators have asked financial institutions to extend more support to stressed property developers amid signs the government may be starting to relax some of its strict Covid-19 policies. E-commerce firm Alibaba.com shares rose 0.79 per cent.

US President Joe Biden met Chinese leader Xi Jinping in person yesterday on the sidelines of the G20 summit, with both stressing the need for a better dialogue between their nations and the two sides establishing a mechanism for more frequent communications.

In cryptocurrencies, bitcoin fell 2.59 per cent to US$16,320.60 after falling below US$16,000 for the first time since Thursday as investors continue to assess the fallout from last week’s collapse of crypto exchange FTX. ― Reuters