Stocks edged down and the dollar eased from 14-year highs yesterday, giving back some of the gains chalked up since Donald Trump’s US election victory as investors took profits on the rally in risk assets over the past six weeks.
Wall Street opened modestly lower, in line with European indexes, with the Dow Jones Industrial Average remaining just below the 20,000 mark.
US stocks have been roaring ahead since the election, with the Dow up nine per cent and the S&P 500 gaining six per cent since November 8 on hopes President-elect Trump’s proposed deregulation and fiscal stimulus will boost economic growth.
The Dow Jones Industrial Average fell 12.11 points, or 0.06 per cent, to 19,962.51, the S&P 500 lost 2.66 points, or 0.12 per cent, to 2,268.1 and the Nasdaq Composite dropped 8.22 points, or 0.15 per cent, to 5,475.72.
The dollar index, which tracks the greenback against six currencies, fell 0.45 per cent, retreating after hitting its highest level since December 2002 on Tuesday.
US 10-year Treasury yields, which reached their highest in more than two years last week after the Federal Reserve raised interest rates and forecast more hikes in 2017 than most investors had expected, fell to 2.55 per cent.
Benchmark 10-year yields have risen almost 80 basis points since early November.
“We’ve been trading in a fairly tight range the last couple of days with low volumes. It’s very holiday-like trading,” said Dan Mulholland, head of Treasuries trading at Credit Agricole in New York.
“I think people are trying to assess how the next year is going to start.”
The euro, which touched a 14-year low on Tuesday, rose 0.6 per cent to $1.0448 while the yen gained 0.4 per cent to 117.35 per dollar.
The Swedish crown rose 1.4 per cent, its biggest one-day gain in six months, to a two-month high of 9.6350 after the Riksbank only narrowly voted to add to its bond-buying programme.
The pan-European Stoxx 600 index fell 0.4 per cent, having hit an 11-month high on Tuesday, led lower by banking shares.
Italy’s Monte dei Paschi di Siena, which must raise €5 billion by the end of the month to avoid state intervention, was once again in focus. Its shares dropped as much as 17 per cent.
China stocks rebounded as fears of a liquidity squeeze in the banking system subsided after risks from a bond scandal appeared contained, and on a pledge to deepen reforms in state-owned sectors.
The blue-chip CSI300 index rose 0.91 per cent, to 3,339.54 points, while the Shanghai Composite Index gained 1.15 per cent to 3,138.54 points, both snapping a two-session losing streak
MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.1 per cent after a string of losses. Tokyo’s Nikkei share average fell, pulling back from earlier one-year highs to close down 0.3 per cent.
The gains in some Asian bourses counterbalanced losses in the US and Europe to leave MSCI’s measure of global equity markets flat on the day.
Oil prices fell after the US Energy Information Administration reported an unexpected crude inventory build. Brent crude fell 0.3 per cent to $55.18 a barrel.
Gold edged up 0.2 per cent to $1,134 an ounce as the dollar slipped.