LONDON – MSCI’s global equity index was down slightly on Monday after hitting record highs the week before as investors took a breath while they waited for the next batch of U.S. economic data.
U.S. Treasury yields rose slightly while the dollar fell slightly against a basket of currencies including the euro although it gained ground slightly against the yen.
The U.S. Federal Reserve’s favoured measure of inflation – the core personal consumption expenditures (PCE) price index – is due on Thursday with a Reuters poll expecting a rise of 0.4%, up from 0.2% in December.
“The PCE price inflation index (is) expected to show a little bit more inflation, in line with the numbers that we saw with the CPI and PPI, so the markets are bracing for that,” said Peter Cardillo, chief market economist at Spartan Capital Securities referring to readings of the consumer price index and the producer price index.
The data will provide the next test for investors, who have had to rethink their bets on central bank rate cuts in recent weeks, surprised by strong U.S. job growth and inflation.
Investors were also watching the risk that U.S. government agencies could be shut down if Congress cannot agree on a borrowing extension by Friday.
On Monday at 10:53 a.m., the Dow Jones Industrial Average (.DJI), opens new tab rose 22.14 points, or 0.06%, to 39,153.67, the S&P 500 (.SPX), opens new tab lost 2.41 points, or 0.05%, to 5,086.39 and the Nasdaq Composite, opens new tab gained 29.02 points, or 0.18%, to 16,025.58.
MSCI’s gauge of stocks across the globe, opens new tab fell 0.39 points, or 0.05%, to 760.79. It had risen to record highs last week driven by a rally in U.S. stocks helped by a bullish financial update from AI pioneer Nvidia (NVDA.O), opens new tab.
DEBT AUCTION
Commodity linked stocks put pressure on European indexes, with the STOXX 600, opens new tab index falling 0.34%, while Europe’s broad FTSEurofirst 300 index, opens new tab fell 0.31%. The STOXX 600 hit record highs last week as comments from ECB policymakers had prompted optimism over rate cuts on Friday.
Emerging market stocks, opens new tab fell 4.48 points, or 0.44%, to 1,023.83.
Japan’s blue-chip Nikkei scaled record highs for the second consecutive trading session, supported by upbeat performances in pharmaceuticals, although profit-taking limited momentum. The Nikkei, opens new tab closed up 135.03 points, or 0.35%, to 39,233.71.
But MSCI’s broadest index of Asia-Pacific shares outside Japan, opens new tab closed 0.43% lower 0.43%, at 526.50.
U.S. Treasuries yields edged slightly higher on Monday in anticipation of the scheduled auction of $149 billion of government debt as investors demanded higher yields to take on such a large supply.
The yield on benchmark U.S. 10-year notes rose 1.6 basis points to 4.276%, from 4.26% late on Friday. The 30-year bond yield rose 1.1 basis points to 4.3913% from 4.38% late on Friday. The 2-year note yield, which typically moves in step with interest rate expectations, rose 2.4 basis points to 4.7139%, from 4.69% late on Friday.
In currencies, the dollar index edged down ahead of U.S. durable goods orders and the inflation reading.
The dollar index fell 0.18% at 103.78, with the euro up 0.31% at 1.0851.
Against the Japanese yen , the dollar strengthened 0.12% at 150.68 ahead of Japanese inflation data due on Tuesday, forecast to slow to 1.8%. That could add to the case against policy tightening by the Bank of Japan, the holdout dove among developed market central banks.
In commodities, oil prices turned higher after earlier slipping amid speculation stronger than expected inflation could delay cuts to high interest rates and cap global fuel demand.
U.S. crude gained 0.75% to $77.06 a barrel and Brent rose to $82.07 per barrel on the day.
Spot gold lost 0.35% to $2,028.79 an ounce. U.S. gold futures fell 0.68% to $2,024.80 an ounce.
Source: Reuters
