A gauge of major world equity markets scaled a fresh record yesterday, boosted by rosy global data, while US bond prices received a lift from a drop in the dollar.
MSCI’s All-Country World index hit an intraday record for a second straight session, although stocks on Wall Street dipped as the financial sector lost ground for the first time in five sessions. Data reports showed improvements in exports from Indonesia and Taiwan, along with falling unemployment in Sweden and the Netherlands.
In the US, manufacturing activity in the Mid-Atlantic region surged to its highest in 33 years, housing data indicated a recovery in the sector was on track, and weekly jobless claims pointed to a labor market that continues to tighten.
Still, US equity indexes pulled back after touching another record high, with the benchmark S&P 500 modestly lower after notching its longest winning streak in nearly four years.
The Dow Jones Industrial Average fell 21.73 points, or 0.11 per cent, to 20,590.13, the S&P 500 lost 6.29 points, or 0.27 per cent, to 2,342.96 and the Nasdaq Composite dropped 13.16 points, or 0.23 per cent, to 5,806.28.
MSCI’s benchmark global equity index edged up 0.09 per cent to 444.08 points, after touching a record high of 444.94. Europe’s index of leading 300 stocks was 0.4 per cent lower. The dollar, off 0.7 per cent, weakened against a basket of major currencies, retreating further from a one-month high on uncertainty about the timing of the next interest rate hike from the US Federal Reserve.
“The dollar rally that preceded (Fed Chair Janet) Yellen’s testimony wasn’t given more fuel so we are seeing that move fade,” said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
Expectations for a rate hike from the Fed in March rose as high as 31 per cent after hawkish comments from Chair Janet Yellen on Tuesday, but fed funds futures now imply traders see a 22 per cent chance of a hike next month.
The fall in the dollar helped bond prices rally, along with the upbeat economic data. Benchmark 10-year notes were last up 16/32 in price to yield 2.4467 per cent, down from 2.50 per cent late on Wednesday.
“We’ve been following the dollar index kind of tick for tick. When the dollar strengthens, US Treasuries sell off, when the dollar weakens, they rally,” said Dan Mulholland, head of Treasuries trading at Credit Agricole in New York.
In commodity markets, oil prices retreated from an early advance spurred by speculation Opec could extend its production cuts.
Brent was last off 0.8 per cent at $55.31, after climbing as high as $56.24 a barrel while US crude was last down 0.4 per cent after touching a session high of $53.59.
Gold was the beneficiary of the weaker greenback, up 0.7 per cent to $1,240.25 an ounce.