The US dollar index dipped after hitting a near 14-year high yesterday while oil prices swung in a volatile session as traders were caught between a build in US stockpiles and the chance of an output cut.
Declines in bank stocks more than offset gains in the technology sector on Wall Street. The S&P 500 had ended on Tuesday at a 10-week high while the Dow industrials set a record close, fuelled by a post-US election rally.
“We had a pretty sharp rally off the election and it was pretty impressive, but it seems pretty clear to me that sort of emotional reaction, if you will, is now long off,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
The dollar has surged in the past week, tracking Treasury yields higher on the expectation increased US government spending could trigger higher inflation.
The Dow Jones industrial average fell 72.62 points, or 0.38 percent, to 18,850.44, the S&P 500 lost 5.42 points, or 0.25 per cent, to 2,174.97 while the Nasdaq Composite added 19.73 points, or 0.37 per cent, to 5,295.35.
The pan-European FTSEurofirst 300 index fell 0.21 per cent, while MSCI’s gauge of stocks across the globe edged down 0.1 per cent.
Oil prices dipped in choppy trading as the market weighed Russia’s comments about a possible meeting with Saudi Arabia about output cuts against a bigger-than-expected US crude storage build.
US crude was last nearly flat at $45.84 a barrel and Brent traded at $46.90, down 0.1 per cent on the day. Crude had risen more than one per cent after a statement from the Russian energy minister.
US President-elect Donald Trump’s plans to cut taxes and increase infrastructure spending could boost economic activity while adding to the deficit, and his proposals to deport illegal immigrants and impose tariffs on cheap imports are seen driving inflation higher.
That prospect triggered a selloff in US bonds that lifted yields across the board, and raised expectations that US interest rates will rise faster than previously anticipated, giving support to the dollar.
US interest rate futures are pricing in an 81 per cent chance of a rate hike at the next Fed meeting, scheduled for December.
The dollar index, a measure of the greenback’s value against a basket of currencies, hit 100.57, its highest since April 2003. It was last little changed on the day.