The dollar reached multi-year highs against both the yen and euro yesterday, adding to gains built on the Bank of Japan's surprising stimulus announcement from last week, but equity markets slipped after weak data out of China and Europe.
US stocks were little changed, as investors paused after a sharp rally on Friday and ahead of US elections today, although economic data pointed to a slowly strengthening economy. The modest gains pushed the S&P 500 to a fresh record of 2,024.46.
“A decelerating China, a very stimulative driven equity story in Japan and a Europe that is flat-lining leaves one option that is obvious, US equities,” said Peter Kenny, chief market strategist at Clearpool Group in New York.
“And today [yesterday], conveniently for the markets, there is an election tomorrow [today], so we get a pause in our trend higher off of the election calendar that helps the market digest recent gains.”
An index of global equities slipped after data showing China's economy losing momentum. The MSCI all-country world equity index was off 0.4 per cent.
China's services sector grew at its slowest pace in nine months, the National Bureau of Statistics said, as a cooling property sector weighed on demand. Another official purchasing managers' index survey on Saturday showed factory activity in the world's second-largest economy unexpectedly fell to a five-month low in October as firms fought slowing orders and rising borrowing costs.
Final European manufacturing PMI data for October showed activity in France contracted by less than first reported , while German factory activity re-bounded after a slight shrinkagein September.
The disappointing data pulled European shares lower as they retreated from a four-week high.
The pan-European FTSEurofirst 300 index closed down 0.9 per cent to 1,340.38 after rising to as much as 1,355.16, the highest since early October.
Two US industry reports showed the manufacturing sector continues to expand, while automakers reported their strongest October sales in years.
The Dow Jones industrial average fell 2.35 points, or 0.01 per cent, to 17,388.17, the S&P 500 gained 5.04 points, or 0.25 per cent, to 2,023.09 and the Nasdaq Composite added 16.32 points, or 0.35 per cent, to 4,647.06.
The dollar climbed as high as 113.90 yen, its highest level since December 2007, and was last up 1.5 per cent at 113.91. The euro hit a low of $1.2441, its weakest since August 2012. It was last down 0.3 per cent at $1.2482.