Global equity markets slid yesterday from record or multi-year highs, while eurozone inflation data gave the euro some respite on relief that price growth in the single currency zone had not slowed even further.
Stocks on Wall Street were lower, following declines across Europe, but emerging market stocks rose, lifted in part by rising Brazilian and Mexican shares.
The MSCI all-country world index of equity performance in 45 countries, fell 0.03 per cent, while the pan-European FTSE Eurofirst 300 index fell 0.4 per cent to 1,374.98.
The Dow Jones industrial average fell 31.03 points, or 0.19 per cent, to 16,712.6.
The S&P 500 lost 2.21 points, or 0.11 per cent, to 1,922.76 and the Nasdaq Composite .IXIC dropped 1.315 points, or 0.03 per cent, to 4,235.884.
Both the S&P 500 and Dow industrials closed at record highs on Monday, while MSCI’s gauge of global equities closed at more than a six-year high, about 1.4 per cent away from all-time highs set in late 2007.
The euro rose 0.31 per cent to 1.3636 against the dollar as traders said expectations the European Central Bank would cut interest rates tomorrow were already largely priced in and that only a weaker inflation number would have triggered a big market move.
Eurozone inflation fell unexpectedly in May, increasing the risks of deflation, as core inflation, excluding energy, food, alcohol and tobacco, fell to 0.7 per cent from 1.0 per cent in April.
With most speculators already running big bets against the euro, traders said, only a weaker-than-expected inflation reading of 0.4 per cent or lower would have taken the euro towards $1.3580 – levels last seen in mid-February.
US Treasuries yields rose to their highest in three weeks as investors reset bets that yields are likely to rise, after they fell to 11-month lows last week.
German bund yields spiked after eurozone inflation was in-line with revised expectations, prompting some in the market who had expected an even weaker number to book profits after a recent rally.
Benchmark 10-year notes were last down 10/32 in price to yield 2.5697 per cent.
German 10-year yields, the benchmark for eurozone borrowing, rose to 1.368 per cent.