The dollar index edged higher yesterday and was on track to end January with gains of more than five per cent, while stock indexes around the world fell as data showed US growth slowed sharply in the fourth quarter.
European stocks ended lower, but registered their biggest monthly gain in three years, while major US stock indexes were on track for a second straight monthly decline.
The dollar index, bolstered by expectations the US Federal Reserve will be the first major central bank to raise interest rates, also was poised to end January with its longest run of gains since the greenback was floated in 1971. It was up 0.1 per cent yesterday.
US gross domestic product expanded at a 2.6 per cent annual pace after the third quarter’s spectacular five per cent rate, the Commerce Department said in its first snapshot of fourth-quarter GDP.
Adding to concerns for stock investors, Greece’s finance minister said the government would not cooperate with the European Union and International Monetary Fund mission bankrolling the country and would not seek an extension to the bailout programme.
On Wall Street, the Dow Jones industrial average fell 94.92 points, or 0.54 per cent, to 17,321.93, the S&P 500 lost 9.85 points, or 0.49 per cent, to 2,011.4 and the Nasdaq Composite dropped 0.97 points, or 0.02 per cent, to 4,682.43.
The FTSEurofirst 300 index of top European shares ended down 0.6 per cent, but rose 7.2 per cent in January, its biggest monthly gain in three years.
The MSCI all-country world index declined 0.6 per cent.
European shares have been lifted recently by expectations that a bond-buying programme by the European Central Bank will help the region’s economic recovery, while US stocks have been hit by falling oil prices and concern about weak overseas demand.
US Treasury debt prices jumped, with long-term yields hitting record lows after the slower-than-anticipated economic growth, which encouraged speculation the Fed will delay interest rate hikes.
Brent crude edged up 67 cents to $49.80 a barrel, supported by renewed violence in Iraq, but a persistent global supply glut kept the market on course for a seventh straight month of declines, its longest bear run on record. US crude was up 97 cents at $45.50.
Russia surprised markets by cutting interest rates as fears of a Russian recession mount following a plunge in global oil prices and Western sanctions over the Ukraine crisis.
The move pressured the rouble, which skidded as much as four per cent against the dollar, and bolstered expectations that Turkey will cut rates again next week, sending the lira to a new record low.