Global equity markets slid for a fifth day yesterday and the dollar strengthened ahead of a report from the latest Federal Reserve policy-setting meeting that is expected to hint, at the least, of a pullback of economic stimulus in September.
Most US, European and emerging market stocks fell, as did US Treasury and German bond prices, amid caution ahead of the release of the Fed’s minutes from its July 30-31 meeting.
The dollar edged higher from a six-month low against the euro and gained versus the yen as traders bet the minutes will reinforce expectations of a pullback in the Fed’s bond-buying program aimed at spurring growth by keeping interest rates low.
Investors are looking for insight on how and when the Fed will begin to cut back on its bond buying, said Wilmer Stith, co-manager of the Wilmington Broad Market Bond Fund in Baltimore.
MSCI’s all-country stock index was down 0.61 per cent at 367.96, while the pan-European FTSEurofirst 300 index of top regional shares closed down 0.6 per cent at 1,207.71.
Oil prices fall on reports Libya may resume exports
The Dow Jones industrial average was down 62.14 points, or 0.41 per cent, at 14,940.85. The Standard & Poor’s 500 Index was down 6.12 points, or 0.37 per cent, at 1,646.23. The Nasdaq Composite Index was down 10.44 points, or 0.29 per cent, at 3,603.16.
Adding to the view that the Fed will begin to taper next month, US home resales rose in July to the highest level in over three years, suggesting sharply rising borrowing costs are having only a limited impact on the housing market’s recovery.
The euro was down 0.31 percent at $1.3375. The dollar index, which measures the greenback versus a basket of six currencies, rose 0.34 percent to 81.179.
German 10-year bond yields rose as high as 1.892 per cent, just below levels on Monday that were the highest since March 2012, and last yielded about 1.87 per cent.
Brent crude oil fell below $110 a barrel on reports some Libyan oil exports might soon resume and on news the Seaway crude oil pipeline had shut, halting shipments from the US Midwest to the Gulf Coast.
Brent futures for October were down 36 cents at $109.79 a barrel. US October oil was $1.40 lower at $103.71 a barrel.