NEW YORK Dec 28 — The S&P 500 and the Nasdaq closed lower yesterday after the release of US economic data at the start of a holiday-shortened week while bond yields rose after China said it would scrap its Covid-19 quarantine rule for inbound travellers.
US Treasury yields rose as investors tried to assess the path of interest rate hikes from the Federal Reserve and eyed China’s scaling back of restrictions. While China’s changes were seen as a potential economic boost, money managers were cautious about reports of increasing infection rates there.
Meanwhile, US economic releases showed that the advance goods trade deficit for November narrowed to US$83.35 billion (RM368.6 billion) from the prior month’s US$98.8 billion, while a separate report pointed to continued struggles for the housing market as home prices fell under rising mortgage rates.
Oil futures, after hitting a three-week high earlier in the day, were a mixed bag at settlement with restarts at some US energy plants shut by winter storms offseting hopes for a recovery in demand after China’s latest easing restrictions.
The rise in Treasury yields put pressure on growth stocks including the rate-sensitive technology sector, according to Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
“It’s a lack of anybody with the conviction to step in and buy right now,” said O’Rourke.
The strategist also cited the weight of a sharp pullback for electric car maker Tesla Inc, which fell 11.4 per cent yesterday for its lowest close since August 2020. Reuters reported Tesla plans a reduced production schedule in Shanghai in January, extending output reductions it began this month.
Gene Goldman, chief investment officer at Cetera Investment Management, described yesterday’s session as “lacklustre” as investors were waiting for next week’s Fed meeting minutes and economic data such as the jobs report.
The Dow Jones Industrial Average rose 37.83 points, or 0.11 per cent, to 33,241.76, the S&P 500 lost 15.56 points, or 0.40 per cent, to 3,829.26 and the Nasdaq Composite dropped 144.64 points, or 1.38 per cent, to 10,353.23.
Markets in some regions including London, Dublin, Hong Kong and Australia remained shut after the Christmas holiday.
MSCI’s gauge of stocks across the globe shed 0.15 per cent and was down 19.8 per cent year-to-date.
While Cetera’s Goldman said China’s changing Covid policies would be “good news for the global economy down the road,” he noted renewed caution among people in China due to the current uptick in Covid infections since China eased restrictions.
Benchmark 10-year notes were up 10.7 basis points at 3.854 per cent, from 3.747 per cent late on Friday. The 30-year bond was last up 12 basis points to yield 3.9417 per cent, from 3.822 per cent. The 2-year note was last was up 6.6 basis points to yield 4.3891 per cent, from 4.323 per cent.
The dollar was roughly flat yesterday as investors digested China’s news.
The dollar index, which measures the greenback against a basket of major currencies, rose 0.086 per cent, with the euro up 0.04 per cent at US$1.0639.
The Japanese yen weakened 0.49 per cent versus the greenback at 133.54 per dollar, while Sterling was last trading at US$1.2026, down 0.28 per cent on the day.
“We’ve been in a very narrow trading range, and I think with the dollar firming up against the euro and yen, we could see further dollar gains against the Chinese currency,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.
In energy futures, US crude settled down 0.04 per cent at US$79.53 per barrel and Brent ended at US$84.33, up 0.49 per cent on the day.
Gold prices jumped to their highest level in six months yesterday with traders optimistic about top consumer China’s decision to further ease Covid-19 restrictions.
Spot gold added 0.8 per cent to US$1,812.58 an ounce. US gold futures gained 1.12 per cent to US$1,816.00 an ounce. — Reuters
