Stocks fall while bond yields rise - 5.10.2018

Dollar weakens despite positive data

US equities erased previous session gains on Thursday as positive data lifted bond yields. The S&P 500 fell 0.8% to 2901.61 with nine of the 11 mains sectors ending lower. Dow Jones industrial average lost 0.8% to 26627.48. The Nasdaq composite slumped 1.8% to 7879.51. The dollar strengthening reversed despite data showing initial jobless claims fell to multi-decade lows and factory orders rose 2.3% in August when 2.2% increase was expected. The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, fell 0.2% to 95.732 but is rising currently. Futures on stock indices point to lower openings today.

Higher bond yields weigh on European indices

European stocks were hammered on Thursday as rising US bond yields triggered a re-pricing of alternative investments - risky assets. Both the EUR/USD and GBP/USD turned higher helped by rising bond yields with Pound rising currently while euro is declining. The Stoxx Europe 600 index dropped 1.1%. Germany’s DAX 30 slid 0.4% to 12244.14. France’s CAC 40 fell 1.5% and UK’s FTSE 100 lost 1.2% to 7418.34. Markets opened flat to 0.1% lower today.

Australian shares rise while Asian indices retreat

Asian stock indices are mostly extending losses today led by technology shares. Nikkei fell 0.8% to two-week low 23783.72 with yen little changed against the dollar. Markets in mainland China remained closed for a weeklong holiday. Hong Kong’s Hang Seng Index is down 0.4%. Australia’s All Ordinaries Index however added to previous session gains rising 0.2% supported by Australian dollar’s continued slide against the greenback.

Brent slips

Brent futures prices are edging lower today supported by concerns the sanctions imposed by the United States on Iran’s crude exports will result in tighter global supply. Prices ended lower yesterday after a report US domestic crude inventories rose sharply last week and Saudi Arabia and Russia said they would raise output to compensate for expected Iran exports declines. Brent for December settlement closed 2% lower at $84.58 a barrel on Thursday.