By Lawrence Delevingne
(Reuters) – U.S. stocks and oil prices tumbled in choppy trading on Monday, as the dollar and Treasuries yields rallied, as Wall Street and Wall Street digest a slew of mixed macroeconomic news.
With markets already jittery over signs of further interest rate hikes from central banks, the UK government’s fiscal plans released on Friday continued to rattle markets. The pound sterling fell to a record low on Monday and a sell-off in British government bonds lifted returns on eurozone bonds.
Federal Reserve officials on Monday played down the rising volatility in global markets, which stemmed from falling US stocks to currency turmoil abroad, and said their priority remained controlling domestic inflation.
“I think everyone felt they were swimming in a tsunami of news last week, after one of the most incredible macro weeks in recent memory,” Deutsche Bank strategist Jim Reid wrote in a note to clients on Monday.
Global equities also fell on concerns about high interest rates and their pressure on the financial system, although reaction to Italy’s election, where a right-wing coalition won a clear majority, was limited.
The Bank of England said on Monday it would not hesitate to change interest rates and was monitoring markets “very closely” after the pound plunged.
The S&P 500 index closed down approximately 1%. The Nasdaq Composite technology index fell 0.6%. The pan-European STOXX 600 index ended down 0.42% at 388.75 points.
On the foreign exchange market, at 18:27 (GMT), the dollar index – which measures the performance of the US currency against a basket of six currencies – rose 0.84%, to 114.090.
The euro was up 0.02% at USD 0.9608, while it was down 0.04% at 144.69 yen.
The pound appreciated 0.08% at 1.0693 dollar, which in turn was stable at 0.9932 Swiss franc. The Australian dollar was stable at 0.6454 US dollar.
In fixed income, the 10-year Treasury yield – the global benchmark for investment decisions – rose 23.10 basis points to 3.9285%.
The five-year bond rate advanced 21.50 basis points to 4.1986%.
The two-year Treasury yield – which reflects bets on the direction of short-term interest rates – was up 13.10 basis points to 4.345%.
The return on the 30-year paper showed an increase of 13.50 basis points, to 3.7467%.
The difference between ten-year and two-year Treasuries yields – viewed as an indicator of economic expectations – rose 10.01 basis points to -41.85 basis points.
The spread between 30-year and five-year bond rates dropped 8.45 basis points to -45.38 basis points. Among commodities, Brent crude closed down $2.09, or 2.43%, at $84.06 a barrel. US crude (WTI) closed down $2.03, or 2.58%, at $76.71 a barrel.
Spot gold lost 1.31% at $1,621.49 a troy ounce.
In the cryptocurrency universe, bitcoin rose 1.54% to $19,100.00. Ether was up 2.05% to $1,319.10.
((Translation by Brasilia Newsroom))
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