- US stocks close little changed
- 10-year Treasury bonds hit monthly high
- Crude oil prices fall as potential rate hikes weigh
SINGAPORE, April 19 (Reuters) – A gauge for global equities slipped on Wednesday after consecutive gains as investors digested the latest earnings reports, while government bond yields rose as UK inflation data solidified expectations of further rate hikes by central banks.
US equities ended little changed, with the S&P 500 slightly below flat level, with a dovish tone as utilities (.SPLRCU) was the best performing sector.
Gains were also capped by a 3.17% decline in Netflix (NFLX.O) after the streaming video company reported quarterly results, while Tesla (TSLA.O) slipped 2.02% after the electric vehicle maker’s April sixth time this year prices had been reduced revenue due after the closing bell.
The Dow Jones Industrial Average (.DJI) fell 79.62 points, or 0.23%, to 33,897.01; the S&P 500 (.SPX) was down 0.35 points, or 0.01%, to 4,154.52 and the Nasdaq Composite (.IXIC) was up 3.81 points, or 0.03%, to 12,157.23.
Expectations of further rate hikes by central banks pushed yields higher after the UK reported a modest fall in inflation in March, but remained the only country in western Europe in double digits. Inflation in the euro zone also eased, but underlying values remained stubbornly high, Eurostat said.
The 2-year gilt yield fell 0.2 basis points to 3.820% after hitting its highest level since March 9 of 3.840%.
The data solidifies expectations for further rate hikes from the Bank of England and the European Central Bank (ECB), while market participants have largely priced in a 25 basis point rate hike by the US Federal Reserve at its May meeting, according to CME’s FedWatch tool.
“Interest rates are going up, which is a headwind for stocks,” said Anthony Saglimbene, chief markets strategist at Ameriprise Financial in Troy, Michigan.
“The tone changes because we kind of walked away or circumvented what most investors feared – we would have a banking crisis 2.0 – and they come back to saying the Fed will hike rates in May and they probably will keep it higher longer.”
The 10-year Treasury note yield rose 2.5 basis points to 3.597% after hitting 3.639%, its highest level since March 22.
The US two-year Treasury yield, which normally moves in step with interest rate expectations, rose 6.2 basis points to 4.261%.
The rise in interest rates weighed on equities as the STOXX 600 slipped from a 14-month high, while the UK FTSE 100 closed up 0.13% on inflation data.
The pan-European STOXX 600 Index (.STOXX) closed down 0.10% and the MSCI Global Stock Index (.MIWD00000PUS) lost 0.23%.
A host of Fed speakers are expected to comment for the remainder of the week before officials enter a lockdown on April 22 ahead of the central bank’s May 2-3 meeting.
The dollar also strengthened on Fed expectations of a rate hike, showing signs of stabilization after five straight weeks of declines.
The dollar index rose 0.256% while the euro fell 0.19% to $1.095.
The Japanese yen weakened 0.52% against the greenback to 134.81 per dollar, while sterling last traded at $1.2436, up 0.10% on the day.
The dollar’s strength, in turn, helped contain crude oil prices, along with concerns that Fed rate hikes could hurt growth and weigh on demand.
US crude was down 2.10% to $79.16 a barrel and Brent was at $83.12, down 1.95% on the day.
Editing by Jacqueline Wong
Our standards: The Thomson Reuters Trust Principles.
Comments are closed.