NEW YORK, April 9 ― A global equity index rose slightly yesterday while Wall Street stocks were muted as US bond yields hit their highest levels since late November and investor optimism about the outlook for Federal Reserve interest rate cuts waned.
The dollar index slid as investors focused on US inflation data due later this week, while the yen dipped to near 34-year lows, with traders remaining alert for any potential action from Japanese authorities to support the weakening currency.
Oil prices fell yesterday on a renewed push for a Middle East ceasefire. However, a Hamas official said no progress had been made on Gaza ceasefire talks in Cairo while Israeli Prime Minister Benjamin Netanyahu said a date was set for an invasion of Rafah, the enclave's last refuge for displaced Palestinians.
Stock markets had made a slow start to the second quarter as the risk of a broader conflict in the Middle East had pushed up oil prices to their highest level since October.
Also, a much stronger-than-expected US jobs report on Friday after solid manufacturing data caused investors to temper bets on a Federal Reserve rate cut in June.
However, Chicago Federal Reserve President Austan Goolsbee said yesterday that the Fed must weigh how much longer it can maintain its current interest rate stance without it damaging the economy.
“People are catching their breath from the underwhelming performance last week. Even with the bounce in markets on Friday, there was more damage done than constructive price action to markets overall,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
Also on investors' minds was the upcoming earnings season, which kicks off on Friday with reports from some of the largest US banks, according to Wedbush's James.
“There's elevated anxiety going into the start of earnings season for those in the bullish camp. We need to see some decent prints and raised guidance,” said James.
On Wall Street, the Dow Jones Industrial Average fell 11.24 points, or 0.03 per cent, to 38,892.80, the S&P 500 lost 1.95 points, or 0.04 per cent, to 5,202.39 and the Nasdaq Composite gained 5.44 points, or 0.03 per cent, to 16,253.96.
MSCI's gauge of stocks across the globe rose 1.60 points, or 0.21 per cent, to 778.11. Earlier in Europe the STOXX 600 index had closed up 0.47 per cent.
Along with earnings, investor focus this week was also on the US consumer price index (CPI) report due out on Wednesday.
And while millions of people in North America looked upward to witness a rare solar eclipse, trading volume on Wall Street was quiet with about 9.55 billion shares changing hands compared with the 11.53 billion average for the last 20 sessions.
“It's probably a better day to watch the eclipse than it is to trade stocks,” said Jay Hatfield, CEO and portfolio manager at InfraCap in New York. “I don't think anybody wants to really reposition one way or the other ahead of CPI.”
US Treasury yields moved higher yesterday as fixed income investors lowered their expectations for how deeply the Fed will be able to cut interest rates this year after the jobs report.
The yield on benchmark US 10-year notes rose 4.6 basis points to 4.424 per cent, from 4.378 per cent late on Friday while the 30-year bond yield rose 2.3 basis points to 4.5548 per cent.
The 2-year note yield, which typically moves in step with interest rate expectations, rose 6.3 basis points to 4.7949 per cent, from 4.732 per cent late on Friday.
In currencies, the dollar index fell 0.2 per cent at 104.15, with the euro up 0.2 per cent at US$1.0857. Against the Japanese yen, the dollar strengthened 0.16 per cent at 151.85.
In energy markets, oil settled above its session lows but still lost ground for the day. US crude CLc1 settled down 0.55 per cent at US$86.43 a barrel while Brent settled at US$90.38 per barrel, down 0.87 per cent on the day.
Meanwhile, gold prices hit a record high for a seventh straight session yesterday, fuelled by central bank purchases and geopolitical tensions, while strong economic data failed to dull bullion's allure.
Spot gold added 0.37 per cent to US$2,338.29 an ounce. US gold futures gained 0.58 per cent to US$2,339.10 an ounce. ― Reuters
