Strong growth data out of Britain prompted the worst daily sell-off in gilts for months and pushed yields on the world’s benchmark bonds higher yesterday, as expectations eased for a Bank of England interest rate cut.
In the US, stock market losses led by Comcast and consumer discretionary stocks were offset by gains in the healthcare sector, while European stocks slid and the US dollar hit highs against the Swedish crown and Japanese yen.
Official data showed that Britain’s economy slowed only slightly in the three months after it voted to exit the EU. It grew by 0.5 per cent between July and September, a touch less than the second quarter’s 0.7 per cent, but tempering fears about an immediate economic impact following the Brexit decision.
Britain’s 10-year government bond was up 12 basis points to yield 1.27 per cent, on track for its biggest daily rise since June 2015.
German and US equivalents rose to their highest since early June at 0.19 per cent and 1.86 per cent, respectively.
“The stronger [gross domestic data] print in the UK has given further weight to speculation that the BoE will not provide further stimulus any time soon,” said Rabobank strategist Richard McGuire.
In US equity markets, investors took Qualcomm’s deal to buy NXP Semiconductors for about $47 billion as a sign of confidence, sending up shares of both.
Despite beating earnings estimates a day earlier, Comcast pulled the S&P and Nasdaq lower, falling as much as 2.7 per cent following price target cuts from Barclays and Deutsche Bank.
The Dow Jones industrial average rose 17.5 points, or 0.1 per cent, to 18,216.83, the S&P 500 lost 0.11 points, or 0.01 per cent, to 2,139.32 and the Nasdaq Composite dropped 12.85 points, or 0.24 per cent, to 5,237.42.
Europe’s Stoxx 600 slipped 0.06 per cent, with defensive sectors such as healthcare and utilities providing the biggest boost to the index, underscoring investor caution.
The MSCI all-country world stock index was down 0.3 per cent.
The US dollar hit its highest in more than seven-and-a-half years against the Swedish crown after dovish comments from Sweden’s central bank, while the dollar hit a three-month high against the yen on expectations for a December Federal Reserve rate hike.
The dollar was last up 1.22 per cent against the Swedish crown at 9.0164 crowns after touching 9.0424 crowns, its highest level since early March 2009.
Oil prices edged higher on a reported drop in US crude oil inventories and as commitments from Gulf Opec members assuaged doubts in the market about cooperation from other producers.
US crude rose 65 cents, or 1.32 per cent to $49.83 a barrel, while Brent crude added 74 cents, or 1.48 per cent, to $50.72.