LONDON / HONG KONG (Reuters) – Global stocks retreated from previous session highs as the dollar hit an eight-day high on Thursday, after hawkish remarks by a senior Reserve official federal government.
Fed Vice Chairman Richard Clarida, one of the main architects of the Fed’s new policy strategy, said on Wednesday that he believes the conditions for an interest rate hike could be met by by the end of 2022, raising expectations that the central bank may soon cut back on its bond buying program. .
“It’s not a question of whether the Fed will drop, but how fast the Fed will drop,” said Giles Coghlan, chief currency analyst at HYCM, adding that he expected that the reduction in the asset purchase program begins in August or September.
“Clarida has definitely taken a turn.”
The MSCI Global Equity Index was flat at 729.68, from a record high of 731.88 reached in the previous session.
US stock index futures – the S&P 500 e-minis – rose 0.17%. US stocks closed largely lower on Wednesday after the Fed’s remarks, with the S&P 500 retreating 0.46% from a record high after data signaled slower job growth in July . [.N]
European stocks, however, hit record highs and rose 0.21% on strong earnings from Danish firm Novo Nordisk and German industrial firm Siemens.
UK stocks were held steady and the pound rose 0.18% against the dollar ahead of a Bank of England policy meeting.
Markets are looking for clues of possible future UK rate hikes, especially as two policymakers have broken ranks to say the time for tighter policy may be near.
“The exit strategy, we believe, will highlight the Bank’s emphasis on unwinding its inflated balance sheet rather than on rate hikes,” Deutsche Bank analysts said in a note.
Clarida’s remarks helped US yields and the dollar.
The benchmark 10-year yield was the latest at 1.192%, from a US close of 1.187%, having touched 1.127% – its lowest level since February – on Wednesday.
The dollar was flat against a currency index after hitting an eight-day high at 92.352. The dollar gained 0.1% to 109.57 yen, while the euro also gained 0.1% to $ 1.1848.
German 10-year bond yields fell 1 basis point to -0.504%. Yields plunged below -0.50%, the European Central Bank’s key rate, for the first time since January Wednesday. [GVD/EUR]
The largest MSCI index of Asia-Pacific equities excluding Japan fell 0.29%.
Uncertainty over Chinese policy remains, but the Asian regional benchmark has recovered most of the ground lost a week ago, when a series of Chinese regulatory crackdowns on sectors ranging from real estate to education has compressed Chinese stocks and eclipsed the region as a whole.
China’s blue chip index fell 0.61%, mostly as investors ditch online game companies, fertilizer producers and e-cigarette makers over fears that critics of these industries in the state media do not portend further government crackdowns.
“In the near term, the new rebound could continue, but uncertainties over policy control will push long-term investors away from Chinese tech names,” said Edison Pun, senior market analyst at Saxo Markets.
Hong Kong’s index fell 0.83% and Korea’s index fell 0.3%. But Australian stocks hit a record high at the close, led by bank stocks, and the Japanese Nikkei climbed 0.52%.
Oil prices fell, reversing early gains as more countries imposed movement restrictions amid an increase in coronavirus cases and as the US dollar strengthened, although tensions in the Middle Orient have kept prices from falling further. [O/R]
US crude fell 0.19% to $ 68.02 per barrel while Brent crude fell 0.21% to $ 70.25 per barrel.
Gold was stable at $ 1,811.40 an ounce. [GOL/]
Ether, the world’s second largest cryptocurrency, lost 1.75% after gaining 8.7% a day earlier before a technical adjustment to its underlying ethereum blockchain, which is expected to take place later Thursday.
Editing by Kenneth Maxwell, Kim Coghill and Giles Elgood