NEW YORK: Global shares edged lower on Tuesday, as new coronavirus outbreaks in Asia vied with strong U.S. consumer confidence, and as investors speculated about whether the Federal Reserve would accelerate its timetable to end easy monetary policy.
MSCI’s all country world index, which tracks shares across 50 countries, fell 0.32 points or 0.04per cent, as declines in Asian equities undercut new highs in European and U.S markets.
The S&P 500 hit a record high for the fourth straight session, helped by technology and banks stocks, and a government survey that showed U.S. consumer confidence in June hit its highest since the pandemic started.
European stocks measured by the pan-European STOXX 600 index were up 0.5per cent, helped by a jump in industrial, financial and mining stocks set to benefit from economic improvements.
However, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 4.16 points or 0.59 percent, to 699.86, as some countries re-imposed lockdowns to contain the spread of the Delta variant of COVID-19.
Chinese stocks lost 0.92per cent as investors booked profits after a rally on the economy’s strong rebound from the pandemic.
Fears over the highly infectious Delta variant are denting sentiment in markets already on edge after the Fed appeared to take a hawkish tilt this month.
Indonesia is grappling with record-high cases, Malaysia is extending its lockdown and Thailand announced new restrictions. Spain and Portugal were imposing travel restrictions on unvaccinated British travelers.
“The outlook for policy in general and the U.S. specifically, both fiscal and monetary, is the more relevant factor in the market’s mind right now rather than the spread of the Delta variant,” said James Athey, investment director at Aberdeen Standard Investments.
“That may well prove to be naive or complacent.”
On Friday, markets will watch the U.S. jobs report for June, with economists polled by Reuters expecting a gain of 690,000 jobs this month, up from 559,000 in May.
On Monday Fed Bank of Richmond President Thomas Barkin said on Monday the U.S. central bank has made “substantial further progress” toward its inflation goal in order to begin tapering asset purchases. [nW1N2B8005
Those comments and the anticipation of a strong jobs report have investors on edge that the Fed’s will bring forward its timeline for interest rate increases.
“Inflation is already much higher than the Fed was anticipating, so it is really the pace of improvement in the labor market that stands head and shoulders above every other indicator in terms of when the Fed will feel comfortable signaling the start of tapering,” said Ray Attrill, Head of FX Strategy at National Australia Bank in Sydney.
On Wall Street, the Dow Jones Industrial Average rose 78.57 points, or 0.23per cent, the S&P 500 gained 4.48 points, or 0.10per cent, and the Nasdaq Composite dropped 6.42 points, or 0.04per cent.
Germany’s DAX added 1per cent, grinding higher after data showed an easing of Germany’s annual consumer price inflation in June. The reading of 2.1per cent was still above the European Central Bank’s target of close to but below 2per cent.
Japan’s Nikkei fell 0.8per cent, while in Australia the ASX/200 index closed down 0.1per cent as increasing COVID-19 curbs dented sentiment. The South Korean market closed 0.5per cent lower.
Yields for benchmark 10-year U.S. Treasuries were last up less than a basis point at 1.4816per cent.
Germany’s 10-year bond yield was up 1 basis point at -0.173per cent.
The U.S. dollar rose to a one-week peak. The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.128 points or 0.14per cent, to 92.015.
The euro was down 0.16per cent, at US$1.1905, and sterling fell 0.4per cent to US$1.3825. The Australian dollar, seen as a liquid proxy for risk appetite, fell 0.6per cent to USUS$0.7520.
Oil prices rose as hopes for a demand recovery persisted despite new outbreaks of the Delta variant.
Brent crude was up US$0.42, or up 0.56per cent, and U.S. crude was last up US$0.46, or up 0.63per cent.
Spot gold fell US$-14.885 or -0.84per cent, to US$1,763.29 an ounce.
(Reporting by Tom Arnold in London and Elizabeth Dilts Marshall in New York; Editing by David Gregorio)
