US and European shares, the dollar and bond yields all headed lower yesterday, with traders using the quiet holiday period to book some profits on the heady gains stocks have seen in the final quarter of 2016 and reposition for the year ahead.
US benchmark indexes were fractionally lower near midday in the aftermath of the S&P 500’s biggest drop in more than two months a day earlier.
As in Europe, financial stocks, which have seen a tremendous run since the US presidential election on the back of higher interest rates, were exerting the greatest downward pressure as bond yields retreatedfurther from their recent highs.
US and European bank stocks both were down by more than one per cent.
“It’s really investor malaise,” said Alan Lancz, president, Alan B. Lancz & Associates Inc, an investment advisory firm in Toledo, Ohio. “There’s no strong activity either way, buy or sell, and light volume.”
The stall on Wall Street put yet more distance between the blue chip Dow Jones Industrial Average and the much-vaunted 20,000 mark.
The Dow has gained more than eight per cent since Donald Trump’s victory in the November 8 US presidential election and has come to within 20 points of the milestone repeatedly without successfully crossing the line.
In late morning US trade, the Dow was down 0.01 per cent at 19,832, the S&P 500 was off 0.03 per cent at 2,249 and the Nasdaq slid 0.2 per cent to 5,427.
The yield on 10-year US Treasury notes slipped to a two-week low as the bond market sell-off fizzled, pulling the dollar to a two-week low against the yen.
Europe’s index of the leading 300 shares fell 0.5 per cent.
The yen’s strength, along with a 17-per-cent slump in Toshiba Corp’s shares after news of potential massive writedowns led to a downgrade to its credit ratings, contributed to a 1.3-per cent fall for the Nikkei.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.45 per cent, helping to keep global stocks in positive territory with a slender 0.17-per-cent gain.
Eurozone bond yields were also falling on concerns about the strength of a rescue plan for Italian banks and normal year-end caution.
Germany’s 10-year yields hit their lowest in seven weeks at 0.164 per cent before recovering some ground, after their discount to Treasury yields reached its widest on record earlier in the week.
The spread remained not far off that mark on Thursday at 2.31 percentage points, and the US 10-year yield slipped back below the key 2.50 per cent mark, retreating further from a two-year high above 2.60 per cent in mid-December.
The dollar eased by 0.6 per cent against the yen to 116.55 , while sterling recovered from a two-month low to trade 0.3 per cent higher at $1.2263. The euro was 0.7 per cent stronger against the greenback.
In commodity markets, oil was mixed after data showed a surprise build in US crude inventories.
US crude fell 0.2 per cent to $53.95 a barrel, while Brent was last down 0.04 per cent at $56.20.