Home Uncategorized US stocks plunge, bond yields climb on political worries

US stocks plunge, bond yields climb on political worries

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A broker looks at a chart on his computer screen on the ICAP trading floor in London, Britain January 3, 2018. REUTERS/Simon Dawson

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  • The Nasdaq and the S&P fall, the US dollar appreciates
  • Euro STOXX 600 rises, euro falls, bond yields rise

April 14 (Reuters) – Shares on Wall Street fell as bond yields and the dollar rose on Thursday as investors feared aggressive U.S. policy tightening could hurt the economy, while the Central Bank European Union reported a steady reduction in stimulus.

The benchmark 10-year US Treasury yield jumped, after two days of declines, after a flurry of economic data such as retail sales and jobless claims and as the ECB signaled tightening plans less aggressive than expected.

The U.S. Federal Reserve should reasonably consider raising interest rates by half a percentage point at its next meeting in May, New York Fed President John Williams said Thursday in another sign. that even more cautious central bank policymakers are okay with a bigger rate hike. Read more

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This was after the ECB announced its intention to reduce bond purchases – known as quantitative easing – this quarter and then end them at some point in the third quarter. Read more

While stocks had gained on Wednesday on hopes that inflation might peak, Thursday’s move seemed to suggest there was little conviction behind those hopes, according to Robert Pavlik, senior portfolio manager at Dakota Wealth at Fairfield, Connecticut.

“When you look at the results, you have a slowing economy, higher interest rates and you still have inflation at higher levels,” said Pavlik, who worries that the war in Ukraine continues. to drive up oil prices, while policymakers’ comments suggest the Fed may need to raise interest rates too quickly.

“Investors are concerned that the Federal Reserve is too aggressive in raising interest rates,” he said.

On Wall Street, the Dow Jones Industrial Average (.DJI) rose 30.5 points, or 0.09%, to 34,595.09 while the S&P 500 (.SPX) lost 25.5 points, or 0. .57%, to 4,421.09 and the Nasdaq Composite (.IXIC) fell 176.20 points, or 1.29%, to 13,467.39.

The pan-European STOXX 600 index (.STOXX) rose 0.67% and the MSCI gauge of stocks across the world (.MIWD00000PUS) lost 0.35%.

Meanwhile, in forex, the euro plunged to its lowest level in two years against the dollar, with comments from ECB President Christine Lagarde seen as a sign the bank was in no rush to raise interest rates. Read more

The dollar index rose 0.755%, with the euro falling 0.85% to $1.0793. The Japanese yen weakened 0.20% against the greenback at 125.90 to the dollar, while the pound last traded at $1.3047, down 0.52% on the day.

Benchmark 10-year notes last fell 30/32 to 2.8025%, down from 2.689% on Wednesday night.

Elsewhere, New Zealand’s central bank raised interest rates by 50 basis points on Wednesday, the biggest rise in more than two decades. The Bank of Canada also raised rates by the same level, making its biggest move in more than two decades and signaling more hikes to come.

Rate increase cycle is disabled

Oil prices fell amid weak trading volumes ahead of the Easter holiday, as traders weighed a bigger-than-expected rise in U.S. oil inventories against a tightening in global supply. 0/R

U.S. crude recently fell 1.12% to $103.08 a barrel and Brent to $107.68, down 1.01% on the day.

Gold also fell after the dollar strengthened and yields rose as investors braced for interest rate hikes in the United States, but demand for safe haven sparked by the Ukraine crisis and rising inflation kept bullion on course for a weekly gain. Read more

Spot gold was last down 0.6% at $1,965.81 an ounce.

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Additional reporting by Tom Wilson in London; Editing by Bernadette Baum and Susan Fenton

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