US stocks fell yesterday after stronger-than-expected US consumer confidence data stoked worries about a potential Federal Reserve interest rate hike this year, while European shares gained and the dollar climbed.
Conference Board data showed US consumer confidence rose to 101.1 in August, beating economists’ expectations for a dip to 97.0, according to a Reuters poll.
The data stoked expectations that the Fed could raise rates this year after top Federal Reserve officials said recently that such a move was possible.
Fed vice chairman Stanley Fischer, in an interview with Bloomberg TV yesterday, said the US job market was close to full strength and the pace of interest rate hikes would depend on how well the economy was doing.
His comments came after Fed chair Janet Yellen painted a rosy picture of the US economy at an economic symposium on Friday and said the case for a rate hike was strengthening.
Investors were still awaiting more clues on whether the Fed will hike in September or December, including tomorrow’s US August non-farm payrolls data.
Some doubts as to whether the US central bank will be able to move next month helped European shares gain.
The dollar index, which measures the greenback against a basket of six major rivals, strengthened to a nearly three-week high of 96.047 as investors looked ahead to Friday’s jobs data. The report is expected to show employers added 180,000 jobs in August, according to a Reuters poll of economists.
MSCI’s all-country world equity index was last down 0.15 points, or 0.04 per cent, at 417.89.
The Dow Jones industrial average was last down 49.04 points, or 0.27 per cent, at 18,453.95.
The S&P 500 was down 4.35 points, or 0.2 per cent, at 2,176.03.
The Nasdaq Composite was down 9.62 points, or 0.18 per cent, at 5,222.71.
Europe’s broad FTSEurofirst 300 index was last up 0.63 per cent, at 1,358.88.
Oil prices fell for a second straight day in response to the dollar’s strength, but the downside was limited by production suspensions in the US Gulf, due to an expected tropical storm. A strong greenback makes fuel purchases more expensive for countries using other currencies domestically.
Brent crude was last down 60 cents, or 1.22 per cent, at $48.66 a barrel. US crude was down 39 cents, or 0.83 per cent, at $46.59 per barrel.
US Treasury yields were little changed as traders awaited the US jobs data. Benchmark 10-year US Treasury yields were last at 1.565 per cent, roughly unchanged from late Monday.
The stronger dollar weighed on safe-haven gold prices. Spot gold prices were last down $4.64, or 0.35 per cent, at $1,318.37 an ounce.