2023-12-20 20:08:13
The MSCI world stock index fell slightly in followingnoon trading Wednesday, while Treasury yields fell as U.S. economic data released earlier in the day beat expectations and British inflation which slowed to a pace which took the markets by surprise.
Oil prices edged higher following hitting their highest level in almost three weeks as traders worried regarding disruptions in the Red Sea following Yemen’s Iran-allied Houthi militants intensified attacks on commercial ships.
The dollar rose once morest other major currencies, while the pound sterling fell sharply following British inflation fell in November to its lowest rate in more than two years of 3.9%. This rate is well below the 4.4% expected by economists polled by Archyde.com, making this country an exception on a global scale.
In U.S. economic data, existing home sales rose unexpectedly in November, but further gains might be limited by a housing shortage as mortgage rates retreat from their highest level in 23 years.
Separately, amid optimism in the labor market, the Conference Board said its consumer confidence index rose to 110.7 this month from the downwardly revised index of 101, 0 of the month of November. Economists had expected an increase to 104.0 from 102.0 previously.
“We got a series of positive results on economic data this morning. Existing home sales and consumer confidence both exceeded expectations and that seems to put some relief on bond yields,” said Sameer Samana , Senior Global Market Strategist at Wells Fargo Investment Institute in Charlotte.
With data suggesting the economy is “heading for a soft landing,” investors are favoring more economically sensitive sectors, such as energy and consumer discretionary, over defensive sectors such as consumer staples , according to Mr. Samana.
On Wall Street, the Dow Jones Industrial Average lost 216.99 points, or 0.58%, to 37,340.93, the S&P 500 lost 41.44 points, or 0.87%, to 4,726.93 and The Nasdaq Composite fell 132.85 points, or 0.89%, to 14,870.37.
The pan-European STOXX 600 index closed earlier 0.19% higher and MSCI’s gauge of stocks across the world lost 0.56%.
US 10-year Treasury yields fell to their lowest level in almost five months, as government bond yields fell around the world following the release of UK inflation data.
Benchmark 10-year bonds fell 4.1 basis points to 3.881%, from 3.922% on Tuesday. The 30-year bond fell 3 basis points to yield 4.0063%. The 2-year bond fell 6.1 basis points to yield 4.3755%.
U.K. inflation data is the trigger for this morning’s rally, said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.
In currencies, the dollar strengthened once morest the pound sterling following UK inflation data fueled speculation over interest rate cuts from the Bank of England. The British pound last traded at $1.264, down 0.71% on the day.
The dollar index, which measures the greenback once morest a basket of major currencies, rose 0.294%, with the euro down 0.35% at $1.0942. The Japanese yen weakened 0.03% once morest the greenback, to 143.87 per dollar.
In the commodities sector, the global oil benchmark, Brent, remained above $80 a barrel amid fears of disruption to global trade and geopolitical tensions in the Middle East following attacks on ships in the Red Sea by Houthi forces from Yemen, allied with Iran.
US crude oil settled at $74.22 per barrel, up 0.38%, and Brent at $79.70, up 0.59% on the day.
Turning to precious metals, spot gold fell 0.4% to $2,031.61 an ounce. U.S. gold futures fell 0.27% to $2,034.50 an ounce.
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