World stock markets paused near record highs yesterday after underwhelming US retail sales data and worries over China’s banking system spurred investors to lock in profits and pushed US Treasury yields and the dollar lower.
Key US stock indexes were modestly lower in trading, weighed by drops in financial stocks.
Equities have been hamstrung by signs of weak consumer spending and waning enthusiasm over a recovery in European corporate earnings. MSCI’s gauge of world stock markets was little changed from its late Thursday close, on track for its first weekly loss in four.
Concern over risky assets like equities has dominated trading this week and sent investors to assets like gold and the Japanese yen after President Donald Trump unexpectedly fired his FBI chief, the potential fallout of which could delay any positive reaction to Mr Trump’s pro-growth policy.
The benchmark S&P 500 stock index and the Dow edged lower as financial stocks fell, but losses on the Nasdaq were kept in check by a rise in technology shares.
The Dow Jones Industrial Average fell 42.75 points, or 0.2 per cent, to 20,876.67, the S&P 500 lost 6.36 points, or 0.27 per cent, to 2,388.08 and the Nasdaq Composite dropped 8.24 points, or 0.13 per cent, to 6,107.72.
China’s banking regulator this week launched emergency risk assessments of lenders’ new business practices, sources told Reuters, as Beijing extended a crackdown on shadow banking.
The dollar index, which tracks the currency against a basket of six major rivals, fell 0.4 per cent to 99.228.
The dollar’s losses tracked a decline in US Treasury yields as increases in domestic retail sales and consumer prices in April fell short of analysts’ forecasts, raising doubts about the economy’s rebound in the second quarter.
The yield on benchmark 10-year Treasury notes was down about six basis points at 2.34 per cent, while the 30-year yield was four basis points lower at 3.00 per cent.
In Europe, stock markets steadied this week. Their outperformance this year against global peers remains intact, with the benchmark’s 10 per cent gains outpacing the seven per cent rise on the S&P 500.
Emerging markets bourses continued their outperformance as well, with MSCI’s emerging markets index rising 0.2 per cent to a fresh two-year high. The gauge has posted year-to-date gains of more than 15 per cent.
Oil prices were lower after rising earlier in the day. Still, oil futures remained on pace for their biggest gain in five weeks as traders expected OPEC-led production cuts to extend beyond the middle of this year and as US crude inventories fell to their lowest levels since February.
International Brent crude futures were at $50.45 per barrel, down 0.6 per cent. US West Texas Intermediate crude futures were at $47.46 per barrel, down 0.75 per cent.