LONDON/SYDNEY : MSCI’s global equities index stayed close to Thursday’s record levels while the dollar and U.S. Treasury yields rose on Friday after going into reverse in the prior session when expectations climbed for U.S. rate cuts.
Gold was on track for a fourth weekly gain in a row and traded near record levels, potentially signalling persistent investor uncertainties about the global economy. [GOL/]
The University of Michigan’s Surveys of Consumers showed that U.S. consumer sentiment fell for a second straight month in September to its lowest point since May as consumers saw rising risks to business conditions, the labor market and inflation.
European stocks gave up earlier gains to trade slightly lower. Stock markets across Asia made strong gains and Chinese stocks hit a 3-1/2 year high, spurred by AI-related earnings growth expectations.
Wall Street was a mixed bag after all three of its main indexes registered record closing highs on Thursday, when investors reacted bullishly to weaker-than-expected jobs data by ramping up bets that the Federal Reserve would make three rate cuts in a row, including a cut on Sept 17 after its meeting.
“The market feels a little stretched and toppy. And now investors in the market are going to focus on next Wednesday and exactly what Jay Powell says, how he says it. Does he sound more dovish? What lines did he delete? What lines did he add?,” said Kenny Polcari, partner and chief market strategist at Slatestone Wealth in Jupiter, Florida, referring to Fed Chair Jerome Powell’s press conference and the Fed’s written statement.
“Rates are going lower for sure but I do think the market has gotten ahead of itself in terms of valuation.”
Thursday’s U.S. consumer price report had been seen as the last major hurdle to the Federal Reserve cutting interest rates next week. While prices showed a bigger-than-expected increase, market participants kept their focus on a separate report that showed a sharp rise in unemployment claims.
On Wall Street at 10:53 a.m. the Dow Jones Industrial Average fell 181.21 points, or 0.39 per cent, to 45,927.30, the S&P 500 rose 2.16 points, or 0.03 per cent, to 6,589.63 and the Nasdaq Composite rose 88.75 points, or 0.40 per cent, to 22,131.82.
MSCI’s gauge of stocks across the globe rose 1.11 points, or 0.11 per cent, to 972.56.
The pan-European STOXX 600 index fell 0.05 per cent after rising earlier in the day.
In currencies, the dollar pared some gains after signs of weakening consumer sentiment. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.13 per cent to 97.68.
Against the Japanese yen, the dollar strengthened 0.31 per cent to 147.65 after U.S. and Japanese finance ministers on Friday released a statement reaffirming that neither country would target currency levels in their policies.
The euro was down 0.09 per cent at $1.1722. On Thursday the European Central Bank kept rates unchanged and signalled that it was in a “good place” on policy. After the meeting, ECB sources told Reuters the December meeting would be the most realistic time frame to debate whether another cut was needed to buffer the economy.
Britain’s economy recorded zero monthly growth in July, in line with forecasts but showing a sharp drop in factory output, weighing on sterling which fell 0.13 per cent to $1.3555.
In U.S. Treasuries, the yield on benchmark U.S. 10-year notes rose 5.3 basis points to 4.064 per cent, from 4.011 per cent late on Thursday while the 30-year bond yield rose 4.5 basis points to 4.696 per cent.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 2.9 basis points to 3.558 per cent, from 3.529 per cent.
In energy markets, oil prices rose by nearly 2 per cent on Friday after a Ukrainian drone attack on a Russian port suspended loadings, outweighing pressure from oversupply concerns and weaker U.S. demand risks.
U.S. crude rose 1.35 per cent to $63.21 a barrel and Brent rose to $67.34 per barrel, up 1.46 per cent on the day.
In precious metals, spot gold rose 0.4 per cent to $3,648.39 an ounce. U.S. gold futures rose 0.31 per cent to $3,648.00 an ounce.
