US stocks fell yesterday, joining a European sell-off driven by troubles at Portugal’s biggest listed bank, while prices of US government debt rose and the Japanese yen climbed to a five-month high against the euro.
Wall Street seemed to ignore government jobless claims data that suggested the US labour market was perking up.
Many US stock market participants have called for a pullback, with the S&P 500 yet to see a daily decline of one per cent or more since April 10.
The Standard & Poor’s 500 Index was down 9.64 points, or 0.49 per cent, at 1,963.19.
The Dow Jones industrial average lost 90.24 points, or 0.53 per cent, at 16,895.37.
The Nasdaq Composite Index was down 27.60 points, or 0.62 per cent,at 4,391.43.
Prices of US Treasuries rose, taking benchmark yields to their lowest in five weeks as investors, eyeing Europe, scrambled for low-risk bonds.
Ten-year notes were off their highs but up 8/32 in price to yield 2.5142 per cent.
Prices of 30-year bonds rose 20/32, yielding 3.343 per cent.
Treasuries have rallied this week on a global drop in stock prices, weak economic data in Italy and elsewhere overseas, and intensified fighting between militants in Gaza and the Israeli military.
“There’s a lot of reasons to find comfort in Treasuries right now,” said Mike Lorizio, head of Treasuries trading at John Hancock Asset Management in Boston.
The yen hit a five-month high against the euro and an almost two-month high against the dollar.
The yen gained 0.73 per cent to 137.56 against the euro, the highest since February 6, and was up 0.50 per cent at 101.06 against the dollar, the highest since May 21.
“We’re seeing some problems coming out of Europe,” said Sireen Harajli, a foreign exchange strategist at Mizuho Corporate Bank in New York. “Markets are selling euros and buying safe havens like the Japanese yen.”
Before the Wall Street open, the plunge in Portugal’s BES drowned out any support from Wednesday’s Federal Reserve minutes. The minutes were seen as showing the US central bank no closer to an outright rise in interest rates.
Stock markets in Germany and France fell around 1.5 per cent while Norway’s market, hurt by poor results at its biggest commercial lender, was down two per cent. An index of European shares lost 0.78 percent, while a measure of world markets lost 0.55 per cent.
Yields on bonds issued by the southern European governments at the heart of four years of turmoil for the eurozone rose across the board. Greece managed to place just half of a planned €3 billion bond placement.
Shares in Portugal’s Banco Espirito Santo plunged more than 15 per cent.
“It is not ideal timing given all the concerns the market has on Portugal,” said Michael Michaelides, a rates analyst at RBS in London.
Oil prices were lower for a ninth session, with Brent nearing $108 a barrel in the commodity’s longest losing streak in four years and US light crude off 0.18 per cent at $102.11. Prices were pressured by weak US gasoline demand and the prospect of rising supply from Libya.