- U.S. markets plunge on rising inflation
- Investors look to Fed policy statement on Wednesday
- US Treasury yields and dollar hold steady
- Oil prices soar as demand for travel returns
LONDON / HONG KONG, June 15 (Reuters) – Investors pulled back and avoided major risks in several markets on Tuesday as markets waited for further guidance from the US Federal Reserve on Wednesday.
Wall Street took a step back on Tuesday, with all three major indices falling after two record highs on Monday. US Treasuries remained stable, as was the US dollar, with little activity before the Fed’s policy statement.
The continued easing of pandemic restrictions has helped push oil prices up in the face of growing demand as those vaccinated begin to travel more freely.
Investors appeared reluctant to take major new risks following two disappointing economic data reports on Tuesday morning. One found that retail sales fell more than expected in May, as consumers shifted spending to service industries as pandemic restrictions loosen. The second saw producers reporting higher price increases as they scrambled to meet growing demand, exacerbating concerns about inflation. Read more
“Supply constraints and growing demand appear to be weighing heavily on businesses. So, while the PPI signals that inflation is rising, keep in mind that there are unique circumstances related to our economic comeback that exert a pressure on those numbers, ”said Mike Loewengart, director of investment strategy at E * Trade Financial. “Since hitting a new high yesterday, the market has been in a bit of a wait configuration today with the Fed’s decision on the bridge tomorrow.”
The readings were important ahead of Wednesday’s statement. The central bank is not expected to announce plans to ease its bond purchases until August, but investors are looking for any indication that the Fed has started discussing such an exit. Fed officials have said they view current price increases as transitory as the economy recovers.
Almost 60% of economists in a Reuters poll expect a cutback announcement in the next quarter, despite a patchy job market recovery. Read more
The MSCI World Stock Index (.MIWD00000PUS), which tracks the stocks of 45 countries, lost 0.85 points or 0.12%.
The Dow Jones Industrial Average (.DJI) lost 94.42 points, or 0.27%, the S&P 500 (.SPX) lost 8.56 points, or 0.20%, and the Nasdaq Composite (.IXIC) lost 101.29 points, or 0.71%.
Oil prices hit their highest levels since 2019 on Tuesday due to the expected rise in demand.
Brent crude rose $ 1.30, or 1.78%, to $ 74.16 a barrel. US crude last rose $ 1.41, or 1.99%, to $ 72.29 a barrel.
In the foreign exchange markets, the dollar has depreciated against other currencies. The dollar index, which measures the greenback against a basket of six currencies, was up 0.02% to 90.511, after hitting 90.677 earlier today, its highest level since May 14.
Spot gold prices fell $ 7.7966, or 0.42%, to $ 1,858.20 an ounce, while US gold futures fell 0.31% at $ 1,860.30.
Benchmark 10-year yields were 1.499%, slightly lower than Monday, when they rebounded from Friday’s three-month low.
Reporting by Thyagaraju Adinarayan in London and Alun John in Hong Kong; Editing by Kim Coghill and Alex Richardson
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