Global equity markets extended a rally yesterday that drew strength from a US jobs report last week that bolstered confidence in the American economy, but the dollar fell and stocks on Wall Street eased as vola-tility picked up.
Brazil’s benchmark stock index jumped more than five per cent after a pro-business candidate surged to a strong finish in Sunday’s presidential election, setting the stage for a likely tight run-off against leftist President Dilma Rousseff.
Friday’s US non-farm payrolls report fuelled speculation that the Fed will hike interest rates by mid-2015 and helped the dollar notch its 12th straight week of gains.
The dollar index slipped but still traded near four-year highs, up 12 straight weeks of gains since early July, the longest in over 40 years.
Treasury prices rose, as did the price of gold after it touched a 15-month low earlier in the day. Gold for December delivery rose 1.2 per cent to $1,207.50 an ounce.
The CBOE Volatility index rose 1.72 points from peak to trough on Monday, almost double its average of 1.06 points over the past 250 sessions. The VIX surpassed the year-long average in nine of the past 10 sessions.
MSCI’s all-country world index of equity performance in 45 countries rose 0.48 per cent, while the pan-European FTSEurofirst 300 index closed 0.22 per cent higher at 1.350.16.
On Wall Street, the Dow Jones industrial average was down 25.23 points, or 0.15 per cent, at 16,984.46.
The Standard & Poor’s 500 Index was down 2.87 points, or 0.15 per cent, at 1,965.03.
The Nasdaq Composite Index was down 15.68 points, or 0.35 per cent, at 4,459.94.
Eurozone bond yields fell after data showed German industrial orders dropped at their fastest rate since 2009 in August, reviving expectations of further monetary easing.
German 10-year Bund yields, the benchmark for eurozone borrowing costs, fell three basis points to 0.91 per cent – just four bps away from record lows.
US Treasuries yields edged lower on the weak European economic data and the notion that modest growth in US hourly earnings could delay the Fed from raising US interest rates.
The 10-year US Treasury note was up 9/32 in price to yield 2.4142 per cent.
The dollar’s rally took a breather on profit-taking.
The dollar index, which tracks the greenback against six major currencies, was last down 0.73 per cent at 86.064.
Against the yen, the greenback was down 0.66 per cent at 109.03 yen. Against the euro, the dollar slipped 0.63 per cent to $1.2595.
Oil rebounded after Brent crude dropped below $92 a barrel.
Brent for November rose 20 cents at $92.51 a barrel. US November crude was up 35 cents at $90.09 a barrel.