World equity markets were little changed yesterday, with the key US Dow and S&P stock indexes hovering below record highs, while the euro fell, erasing earlier gains spurred by the European Central Bank’s decision to refrain from more stimuli.
Oil prices declined after a rise in US gasoline inventories pushed oil stocks to a record high, feeding uneasiness about a persisting global supply glut.
US and European equity markets have been on a tear due to upbeat company earnings and encouraging US economic data, helping them rebound from losses tied to Britain’s stunning vote to leave the EU a month ago.
The resilience of the stock market has prompted investors to pare their safehaven holdings of US Treasuries and other low-risk government bonds.
“Stocks look really cheap to bonds and if earnings are going up, why would you want a bond?” said Nick Kalivas, senior equity strategist at Invesco Powershares in Chicago.
The Dow Jones industrial average was down 17.7 points, or 0.1 per cent, to 18,577.33, the S&P 500 was little changed at 2,173.12 and the Nasdaq Composite was up 5.95 points, or 0.12 per cent, to 5,095.89.
Europe’s broad FTSEurofirst 300 index was up 0.15 per cent, at 1,347.13.
The MSCI world equity index, which tracks shares in 45 nations, rose 0.63 points or 0.15 per cent, to 413.45. It faded from nine-month highs, cooled by signals from Japan that its next shot of stimulus will not include hand-out ‘helicopter money’.
As stock markets lingered near their peaks, global bond yields rose with the benchmark 10-year Treasury yield reaching 1.628 per cent, its highest since June 24 – the day after the Brexit referendum.
The ECB, at its first meeting since the Brexit vote, opted to keep its record low interest rates on hold as expected.
ECB president Mario Draghi said the bank would take time to see the impact of Britain’s decision to leave the EU.
The euro was down 0.15 per cent at $1.0996 and 0.75 per cent at 116.85 yen. It had touched $1.1058 and 118.45 yen earlier yesterday.
The yen earlier touched a six-week low against the dollar on reports of a 20-trillion-plus-yen Japanese stimulus package only to bolt upwards as Bank of Japan chief Haruhiko Kuroda shot down talk of ‘helicopter money’, effectively giving cash directly to the population, in a BBC radio interview.
The Japanese currency recovered versus the greenback, and was last up 0.6 per cent at 106.16 yen.
In the oil market, Brent crude was last down $0.28, or 0.59 per cent, at $46.89 a barrel. US crude was last down $0.38, or 0.83 per cent, at $45.37 per barrel.
Gold prices rebounded from a three-week low after the ECB left rates alone. Spot prices rose $7.61 or 0.58 per cent, to $1,323.12 an ounce.