Global equity markets dipped modestly yesterday but remained near record highs, while the yield on US government debt rose as a gain in core consumer prices should keep the Federal Reserve on course to raise interest rates later this year.
Fed Chair Janet Yellen yesterday acknowledged recent sluggishness in the US economy, including a near-stagnant performance in the first few months of the year.
She also highlighted the economy’s steady job growth, seen as keeping the Fed on track for its first interest-rate hike in nearly a decade.
A Labour Department report on the Consumer Price Index bolstered that idea yesterday. The so-called core CPI, which strips out food and energy costs, rose 0.3 per cent in April, the largest gain since January 2013. In the 12 months through April, the core CPI advanced 1.8 per cent after a similar gain in March.
The benchmark 10-year US Treasury note was down 11/32 in price, pushing its yield up to 2.2251 per cent.
MSCI’s all-country world index, a measure of the stock performance in 46 countries, slid 0.27 per cent, slightly below an all-time high set in late April.
The pan-European FTSEurofirst 300 index of top regional shares closed down 0.12 per cent at 1,617.91 points while Wall Street was mixed in midday trading.
The Dow Jones industrial average fell 46.51 points, or 0.25 per cent, to 18,239.23 and the S&P 500 slid 2.63 points, or 0.12 per cent, to 2,128.19.
The Nasdaq Composite added 3.40 points, or 0.07 per cent, to 5,094.19.
Oil prices fell as worries over the impact of war in the Middle East on crude supplies were outweighed by reports of profit-taking ahead of a long weekend.
Monday is Memorial Day in the United States and a public holiday in much of Europe, and many markets will be closed.
July Brent crude was down $1.16 at $65.38 a barrel. US crude for July was down 98 cents at $59.74 a barrel.
The dollar turned higher on the US inflation report, which indicated underlying pressures are building and bolstered the case for the Fed to raise interest rates later this year.
The dollar was up 0.36 per cent to 121.45 yen, while the euro fell 0.73 per cent to $1.1031.
The dollar index rose 0.85 per cent to 96.066.