Global equities declined yesterday after a mixed bag of US conomic indicators and a pullback in oil prices dampened investor enthusiasm.
Major US equities indexes were little changed, pressured by a 1.6 per cent drop in energy shares.
US consumer prices in January posted their biggest drop since 2008 as gasoline prices continued to tumble, while underlying inflation rose modestly. The figures could give a cautious Federal Reserve more room to hold off on raising interest rates.
The MSCI All-Country World equity index was down 0.18 per cent after having hit a record high of 434.40 points earlier in the trading day.
US Treasuries prices edged lower yesterday, as debt investors saw the rise in core CPI failing to bolster the case for dovish Federal Reserve policy and as incoming supply weighed on prices.
Fed Chair Janet Yellen, in testimony before Congress this week, said the US central bank would consider rate hikes on a “meeting-by-meeting” basis.
“The way Yellen spelled it out, they’re obviously looking at inflation, and it’s still a bit too low for them to raise rates,” said Justin Lederer, an analyst at Cantor Fitzgerald in New York.
The Dow Jones industrial average fell 6.1 points, or 0.03 per cent, to 18,218.47, the S&P 500 lost 2.46 points, or 0.12 per cent, to 2,111.4, and the Nasdaq Composite added 9.40 points, or 0.19 per cent, to 4,976.54.
In Europe bond yields sank to fresh lows as investors positioned for an extended era of cheap money ahead of the European Central Bank’s looming bond-buying scheme.
Central banks’ battle to keep cash flowing into the financial system to avert a deflationary spiral has driven core European government bond yields into or close to negative territory. German seven-year bond yields yesterday fell below zero for the first time.
Bets that a US rate hike might come later than expected also bolstered views that rock-bottom rates would remain for the near future.
The pan-European FTSEurofirst 300 rose 0.8 per cent.
Greek equities were down two per cent, with the country’s fate in focus after it said on Wednesday that it would struggle to make debt repayments to the International Monetary Fund and the European Central Bank this year.
The dollar rose one per cent against a basket of currencies after a two-day decline following data showing a rise in US durable goods orders.
The Russian rouble strengthened against the dollar for a third straight day.
Oil prices fell, with Brent crude down 1.2 per cent and US crude down 3.2 per cent.
Gold prices rose 0.35 per cent, rallying for a second day on expectations that the Federal Reserve would push out its first interest rate hike.