World stocks were down for the fourth day in a row yesterday, but strong economic growth in Germany boosted the euro to an almost three-week high.
Wall Street was lower on weak oil prices, uncertainty about US tax policy and the economy’s ability to deal with more interest rate hikes. European stocks fell to a two-month low.
US Treasury two-year note yields climbed to a nine-year peak while long-dated debt yields fell, flattening the yield curve flattened for a second straight day, while investors braced for a Federal Reserve December rate hike.
In Germany a 0.8-per cent third-quarter growth reading beat forecasts and showed the economy expanding at annualised rates of more than three per cent.
“It’s been a euro trade today, and it’s stronger against just about everything,” Brad Bechtel, managing director FX at Jefferies in New York, said.
“The numbers out of Germany were pretty good last night.”
The dollar index fell 0.45 per cent, with the euro up 0.81 per cent to $1.1759.
On Wall Street the defensive utilities sector had the strongest showing while the energy sector was among the weakest.
“You’re at the end of the earnings season, economic data is all distorted because of the hurricanes, I don’t think there is going to be any clear picture until we get a firm yes or no for the tax bill,” Scott Brown, chief economist at Raymond James in St Petersburg, Florida.
The Dow Jones Industrial Average fell 55.29 points, or 0.24 per cent, to 23,384.41, the S&P 500 lost 7.42 points, or 0.29 per cent, to 2,577.42 and the Nasdaq Composite dropped 19.04 points, or 0.28 per cent, to 6,738.56.
The pan-European FTSEurofirst 300 index lost 0.57 per cent and MSCI’s gauge of stocks across the globe shed 0.18 per cent.
Monetary policy was also on traders’ minds with the heads of the US, European, British and Japanese central banks attending a European Central Bank conference in Frankfurt.
The US two-year yield hit a nine-year peak just shy of 1.7 per cent, up from Monday’s 1.687 per cent.
Benchmark 10-year notes last rose 5/32 in price to yield 2.3842 percent, from 2.4 per cent late on Monday. The mood in Asia was gloomy after China’s retail sales in industrial output data missed market expectations.
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.4 per cent in its third consecutive day of losses. Japan’s Nikkei was unchanged after four sessions of losses.
Oil declined yesterday for a third day as evidence of rising US output and a gloomier outlook for demand growth in a report from the International Energy Agency (IEA) weighed on prices.
US crude fell 2.52 per cent to $55.33 per barrel and Brent was last at $61.51, down 2.61 per cent on the day.
Gold inched down to $1,272.50 an ounce.