Global equity markets edged lower yesterday as a two per cent drop in crude prices weighed on investor sentiment and traders awaited signals of a potential interest rate increase this year from this week’s meeting of US Federal Reserve policymakers.
Oil prices fell to two-and-a-halfmonth lows amid worries that a global glut of crude and refined products would weigh on markets for some time.
Shares in Europe closed slightly higher but a gauge of equity markets worldwide was lower. Longer-dated Treasury yields fell and the dollar was slightly lower against the euro and yen as investors looked to the conclusion of a two-day Fed policy meeting tomorrow and a Bank of Japan meeting on Friday.
MSCI’s all-country world stock index fell 0.24 per cent, but the pan-European FTSEurofirst 300 of leading regional stocks closed up 0.06 per cent to 1,344.95.
The Dow Jones industrial average fell 103.37 points, or 0.56 per cent, to 18,467.48. The S&P 500 slid 11.36 points, or 0.52 per cent, to 2,163.67 and the Nasdaq Composite lost 12.36 points, or 0.24 per cent, to 5,087.80.
Crude prices were trading at prices last seen in early May. Traders said oversupply and growing economic headwinds were weighing on oil. Brent crude futures were down 2.21 per cent at $44.68 a barrel, while US crude was down 2.49 per cent at $43.09 a barrel.
The dollar has gained against major currencies in recent weeks as better-than-expected economic data revived expectations that the Fed will raise interest rates again this year. The dollar edged lower against the yen at 105.87 and slid slightly against the euro to $1.0989.
Benchmark 10-year Treasury notes were little changed in price to yield 1.5680 per cent.
Eurozone bond yields edged toward post-Brexit lows after the world’s biggest economies reiterated their commitment to using all policy tools to lift growth.
In a weekend G20 meeting dominated by last month’s British vote to leave the EU and by fears of protectionism, policymakers said they would use “monetary, fiscal and structural” tools tocollectively support the global economy.
Eurozone yields were broadly lower, with German 10-year yields down 2.4 basis points at -0.10 per cent , within sight of the record low of -0.20 per cent hit in early July.