Global equity markets and bond yields fell yesterday, weighed by data that showed the US economy contracted in the first quarter and by conflicting signals from Greece’s debt talks.
European shares also fell on data showing private loan growth in the eurozone stalled in April, while the separate report on US gross domestic product also indicated after-tax corporate profits declined 8.7 per cent in the first quarter.
Conflicting reports that Athens was close to clinching a reforms-for-cash deal with its creditors pushed German 10-year bond yields down 3 basis points to 0.50 per cent.
US debt yields also fell, with the 30-year US Treasury falling to its lowest in three and a half weeks, at 2.84 per cent, while benchmark US 10-year yields also hit a three-and-a-half-week low at 2.097 per cent.
The US government slashed its GDP estimate to show the economy shrank at a 0.7 per cent annual rate in the first quarter instead of the 0.2 per cent growth it estimated in April. The economy appears poised for its worst first-half performance since 2011.
Adam Sarhan, chief executive of Sarhan Capital in New York, said the weak growth data yesterday removed the imminent threat of the Federal Reserve raising interest rates, which should be supportive of stocks.
“So far, the Fed’s been data dependant and the data including today’s GDP numbers on average continues to be weaker than expected,” Sarhan said.
MSCI’s all-country world index of the stock performance in 46 countries fell 0.49 per cent. The pan-European FTSEurofirst 300 shed 1.25 per cent to 1,595.10 points by 1407 GMT.
Wall Street was lower in morning trading after the GDP data and as corporate profits declined the most in a year.
The Dow Jones industrial average fell 132.63 points, or 0.73 per cent, to 17,993.49. The S&P 500 slid 12.95 points, or 0.61 per cent, to 2,107.84 and the Nasdaq Composite lost 29.72 points, or 0.58 per cent, to 5,068.26.
US 10-year notes rose 4/32 in price to yield 2.1144 per cent.
Oil surged more about three per cent as a rally in the dollar faded and after data from a day ago showed four straight weekly draws in US stockpiles.
North Sea Brent was up $2.15 at $64.73 a barrel, and US crude rose $1.75 to $59.43 a barrel.
The dollar index was up 0.07 per cent at 97.035 and remained on track for a rise in May, resuming a string of nearly uninterrupted monthly gains that began last July.
The dollar was off 0.2 per cent at $1.0968 against the euro, which, unlike bonds and stocks, was benefiting from hopes a deal may soon be reached between Greece and its creditors.
The dollar rose 0.11 per cent to 124.08 yen.