The dollar gained and global equity markets traded at five-year highs yesterday, buoyed by a benign outlook for stocks as investors awaited a backlog of US economic data that may yield clues on when the Federal Reserve will begin to pare its stimulus programme.
Wall Street traded near break-even on the realisation the US fiscal impasse that was resolved last week by pushing decisions into early next year will likely keep the Fed’s bond-buying in place well into 2014, which would be good for stocks.
The United States is enjoying moderate growth with tame inflation, a Goldilocks economic climate that is neither too hot nor too cold but has been distorted by the Fed’s intervention.
MSCI’s world equity index, which tracks shares in 45 countries, was up as much as 0.7 per cent before flattening, while the FTSEurofirst 300 index of leading European shares rose 0.23 per cent to close at a provisional 1,280.66.
The S&P 500 hit a record high early in the session, boosted by gains in Apple after a bullish research note, but lacklustre results from McDonald’s Corp. weighed on the Dow and S&P, which reversed gains to trade slightly lower.
The Dow Jones industrial average was down 12.54 points, or 0.08 per cent, at 15,387.11. The Standard & Poor’s 500 Index was down 0.72 points, or 0.04 per cent, at 1,743.78.
The Nasdaq Composite Index was up 6.72 points, or 0.17 per cent, at 3,921.00.
The day’s US economic data supported views of modest growth and combined with the prospect of renewed political gridlock at the beginning of 2014, the Fed’s stimulus programme may stay intact for months, if not more.
US home resales fell in September and prices rose at their slowest pace in five months, the latest signs higher mortgage rates were taking some edge off the housing market recovery.
The National Association of Realtors said yesterday that home sales fell 1.9 per cent in September to an annual rate of 5.29 million units.
August’s sales pace was revised down to 5.39 million units from the previously reported 5.48 million units.
US Treasuries prices dipped ahead today’s release of employment data for September, after the partial US government shutdown for more than two weeks delayed economic releases and increased concerns that the closures will weigh on growth.
The dollar climbed against the yen and the Swiss franc as a few investors positioned for an expected strong US jobs data reading today, which will provide new fodder for the debate over when the Fed will begin to scale back monetary stimulus.
The dollar rose 0.44 per cent against the yen to 98.13 yen , inching toward a near three-week high of 99.00 yen set last Thursday.
US crude slipped below $100 per barrel on pressure from strong supply, but losses were limited by hopes the Fed will delay curbing its money-printing program until next year.
Brent crude futures for December delivery slipped 24 cents to $109.70 a barrel.
US crude oil futures for November delivery fell by $1.05 to $99.76 a barrel.