US stocks and oil fall with eyes on stimulus

Reuters NEW YORK | Updated on August 14, 2020

File Photo   -  Bloomberg

Dow Jones Industrial Average fell 0.38 per cent, while the S&P 500 lost 0.26 per cent

Stocks ticked down from 6-month highs on Thursday on concern over a stalled US economic relief deal, while oil fell and the euro edged up against the US dollar.

Treasury yields hit multi-week highs after record supply at a 30-year bond auction drew poor demand.

Initial claims for US state unemployment benefits dipped below 1 million last week for the first time since mid-March, but the expiration at the end of July of a $600 weekly jobless supplement likely contributed to the decline.

Data showed the world's largest economy regained only 9.3 million of the 22 million jobs lost between February and April. But Wall Street has recovered most equity market losses and the benchmark S&P 500 was within a few points of a record high.

“Our take on a new high, if it happens, is that it's another reminder to investors how disconnected the stock market and the economy have been this year. Stocks have soared but the economy it's improved, yes but a million initial claims is still not good,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

The Dow Jones Industrial Average fell 105.46 points, or 0.38 per cent, to 27,871.38, the S&P 500 lost 8.91 points, or 0.26 per cent, to 3,371.44 and the Nasdaq Composite added 28.28 points, or 0.26 per cent, to 11,040.52.

The STOXX 600 suffered its first fall in five days after Washington said it would maintain 15 per cent tariffs on planes and 25 per cent tariffs on other European goods.

The pan-European index lost 0.63 per cent and MSCI's gauge of stocks across the globe shed 0.14 per cent.

The 5-month global rally has caused MSCI's world index to rise 50 per cent from its March lows and reach within 2 per cent of an all-time high.

In the currency and bond markets, faltering hopes for a compromise between Republicans and Democrats over additional stimulus for the US economy dragged the dollar index down.

The greenback fell 0.049 per cent, with the euro up 0.19 per cent to $1.1804.

The Japanese yen weakened 0.03 per cent versus the dollar to 106.95 per dollar, while Sterling was last trading at $1.3049, up 0.13 per cent on the day.

A sell-off in benchmark government bond markets also eased, as investors digested the biggest-ever 10-year US debt sale, and some surprisingly robust US inflation figures.

US Treasury yields rose to multi-week highs after the Treasury auction of a record amount of 30-year bonds.

Benchmark 10-year notes last fell 8/32 in price to yield 0.7126 per cent, from 0.686 per cent late on Wednesday.

The 30-year bond last fell 44/32 in price to yield 1.4224 per cent, from 1.365 per cent.

In Asia, Japanese stocks were the main mover, soaring 1.8 per cent to a six-month peak on gains from chip firms.

MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.05 per cent rose 0.11. Emerging market stocks rose 0.17 per cent.

Oil prices eased after the International Energy Agency lowered its 2020 oil demand forecast following unprecedented travel restrictions, but a weak dollar limited losses. Traders kept an eye on US stimulus headlines.

“Overall, neither yesterday's OPEC or today's IEA release appeared to have much effect on an oil market that is still primarily focused on the ongoing expansion in risk appetite that remains undeterred by lack of progress in formulating a viable US stimulus deal,” said Jim Ritterbusch of Ritterbusch and Associates.

US crude recently fell 0.75 per cent to $42.35 per barrel and Brent was at $45.07, down 0.79 per cent on the day.

Spot gold added 1.7 per cent to $1,951.06 an ounce. Silver gained 6.56 per cent to $27.24.

Published on August 14, 2020

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