Latest News

Equities fall, yields jump after data and Powell comments

0

Equities fall, yields jump after data and Powell comments By Reuters

Breaking News

‘;

Economy

Published Feb 05, 2024 02:05
Updated Feb 05, 2024 20:01

© Reuters. FILE PHOTO: A display of stock information is seen in front of buildings in Lujiazui financial district that are shrouded in fog amid an orange alert for heavy fog in Shanghai, China January 31, 2024. REUTERS/Xihao Jiang/File Photo

By Chris Prentice and Nell Mackenzie

NEW YORK/LONDON (Reuters) -Shares on Wall Street and in Europe fell on Monday and government bond yields jumped as traders amended their expectations of a near-term U.S. interest rate cut.

Federal Reserve Chairman Jerome Powell continued to push back against the prospect of near-term rate cuts, in an interview aired on Sunday.

U.S. services sector growth picked up last month and employment rebounded, data showed on Monday. But suppliers appeared to fall behind, leaving a measure of input costs at an 11-month high.

“Markets could get squeamish as purchasing managers reported a big uptick in prices paid, mostly reflecting the increase in shipping costs. However, this uptick should be temporary,” said Jeffrey Roach, chief economist for LPL Financial in Charlotte, North Carolina.

The Dow Jones Industrial Average fell or 0.60% to 38,422.93, the S&P 500 retreated 0.24% to 4,946.73 and the Nasdaq Composite was down 0.20% at 15,597.39 by 2:17 p.m. EST (1917 GMT).

MSCI’s broadest index of world shares fell 0.36%. The pan-European STOXX 600 index ended 0.1% lower after closing out the previous week flat.

Two-year Treasury yields jumped to a one-month high of 4.483% after Federal Reserve chair Jerome Powell said in an interview aired on Sunday that he wanted to wait to be a little more confident that inflation was sustainably falling before moving interest rates lower.

A higher number of companies’ fourth-quarter results missed analyst expectations than historically, said a Goldman Sachs (NYSE:GS) research note on Monday.

Small-cap stocks in Asia slumped as investor sentiment remained at rock-bottom on a lack of policy support and broad stimulus for China.

The S&P China CSI 1000 small cap stock index fell more than 6%, closing at a three-year low.

China’s securities regulator vowed to prevent abnormal market fluctuations on Sunday, but announced no specific measures.

China’s blue-chip index closed up about 0.7% after dropping 2% earlier in the session and touching a five-year low last week. Hong Kong’s Hang Seng Index finished down about 0.2%.

State-backed investors – dubbed the “national team” – have stepped up buying blue-chip funds to support the market in recent weeks, but so far have failed to arrest a slump.

FED FOCUS

Global markets have been focused on the timing of the first Federal Reserve rate cut, after a strong slate of economic data along with resistance from central bankers led investors to scale back their rate-cut bets.

Markets are currently pricing in an 80% chance of the Fed standing pat on rates in March, compared with a 33% chance at the start of the year, the CME FedWatch tool showed. Traders are pricing in just below 120 bps of cuts in total this year, compared with roughly 144 bps last week.

Data on Friday showed U.S. job growth accelerated in January and wages increased by the most in nearly two years, signs of persistent strength in the labour market that encourage the Fed to start easing later rather than sooner.

“I think the Fed could be concerned with the link between sticky wages and future inflation prints,” said Ben Bennett, APAC investment strategist for Legal and General Investment Management. “Underlying economic activity has also been robust, so I think the Fed could be back in wait-and-see mode.”

In an interview with CBS News show “60 Minutes,” Powell said the U.S. central bank can be “prudent” in deciding when to cut rates, with a strong economy allowing central bankers time to build confidence that inflation will continue falling.

{{2126|The dodollar index, which measures the U.S. currency against six other majors, rose to twelve-week peak of 104.6 [FRX/]

Oil prices rose amid concerns over escalating Middle East tensions after U.S. strikes on Iran-aligned factions in Iraq, Syria and Yemen.

U.S. crude rose 0.98% to $72.99 a barrel and Brent crude rose to $78.15 per barrel.

Elsewhere in commodities, spot gold prices fell 0.59% and gold futures settled down 0.5% at $2,042.90.

Equities fall, yields jump after data and Powell comments

Our Apps



Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Dow Jones Falls 274 Points After Powell Comments; Cathie Wood Loads Up On Stock Amid 40% Plunge

Previous article

Britain’s King Charles diagnosed with cancer

Next article

You may also like

Comments

Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News