Markets wrap: Tech leads stocks lower; dollar drops with yields

A Qualcomm Inc. baseband modem integrated circuit (IC) chip, center, of an Apple Inc. iPhone 6 smartphone is seen in an arranged photograph in Bangkok, Thailand, on Saturday, Feb. 3, 2018. (Bloomberg pic)

LONDON: A slide in technology shares sent most US equities lower, while Europe’s benchmark rose and Asian shares extended a losing streak as traders turned their focus to the outlook for monetary policy amid lingering worries for global trade.

The information technology and financial sectors were the biggest losers in the S&P 500. Energy companies and miners were among the biggest winners in the Stoxx Europe 600 Index as the Bloomberg’s Commodity Index rose. The MSCI Asia Pacific Index was on course for a 10th consecutive decline, the longest losing streak since 2002. Treasury yields eased and the dollar turned down after a softer-than-expected core producer-price inflation number crimped expectations for Federal Reserve tightening.

Brent crude traded near a two-month high as shrinking oil inventories pointed to an increasingly tight global market. Meanwhile, Hurricane Florence threatens to disrupt fuel supplies as it moves toward North Carolina.

Central banks are back in the spotlight this week. Market participants are increasingly preparing for the Federal Reserve to raise rates twice more in 2018 while watching for policy meetings scheduled for the European Central Bank and Bank of England, as well as Turkish and Russian central banks. Meanwhile, investors will be gauging the potential for extreme weather to disrupt economic activity, as threats from trade tension and Brexit negotiations linger.

“It’s pretty clear they would like to get out of these negative rates,” Andrew Wilson, the global co-head of fixed income at Goldman Sachs Asset Management, said in an interview on Bloomberg TV. “We’re still talking a year away – it’s not imminent. If we see some continued tightening in the labour markets in Europe, that might be the catalyst for them to get back to zero. Again, we’re only getting back to zero.”

Elsewhere, emerging-market shares edged lower while their currencies climbed as India’s rupee jumped after an official said the government may announce measures to support the currency. Hungary’s forint fell as the country’s government faced possible censure for eroding democratic standards. Cryptocurrencies extended their collapse from a January high.

Apple unveils its latest iPhones at 1pm New York time Wednesday. Policy decisions from the Bank of England and the European Central Bank on Thursday. Australia employment is due Thursday. China releases August industrial production, retail sales data on Friday. US retail sales, industrial production, consumer sentiment on Friday.

These are the main moves in markets:

Stocks

The S&P 500 Index eased 0.2% as of 10.21am in New York, while the Dow Jones Industrial Average was little changed and the Nasdaq Composite Index slumped 0.7%. The Stoxx Europe 600 rose 0.3%. The UK’s FTSE 100 gained 0.2%. Germany’s DAX Index edged 0.1% higher. The MSCI Emerging Market Index sank 0.1% to the lowest in about 16 months. The MSCI Asia Pacific Index declined 0.1%, hitting the lowest in 13 months with its 10th consecutive decline.

Currencies

The Bloomberg Dollar Spot Index dropped 0.3%. The euro gained 0.1% to $1.1620. The British pound fell less than 0.1% to $1.3026. The Japanese yen strengthened 0.3% to 111.25 per dollar.

Bonds

The yield on 10-year Treasuries fell two basis points to 2.95%, while the two-year note yield eased one basis point to 2.74%. Germany’s 10-year yield fell two basis points to 0.41%. Britain’s 10-year yield fell two basis points to 1.48%. Italy’s 10-year yield rose four basis points to 2.97%.

Commodities

West Texas Intermediate crude rose 1.2% to US$70.06 a barrel. Gold dropped 0.3% to $1,194.87 an ounce.