World stocks down for fourth consecutive day, but Germany is on the up
New York — World stocks were down for the fourth day in a row on Tuesday, but strong economic growth in Germany boosted the euro to an almost three-week high.
Wall Street was lower on weak oil prices, uncertainty about US tax policy and the economy’s ability to deal with more interest-rate hikes. European stocks fell to a two-month low.
US treasury two-year note yields climbed to a nine-year peak while long-dated debt yields fell, flattening the yield curve flattened for a second straight day, while investors braced for a Federal Reserve December rate hike.
In Germany, a 0.8% third-quarter growth reading beat forecasts and showed the economy expanding at annualised rates of more than 3%. "It’s been a euro trade today, and it’s stronger against just about everything," Brad Bechtel, MD of forex at Jefferies in New York, said. "The numbers out of Germany were pretty good last night."
The dollar index fell 0.45%, with the euro up 0.81% to $1.1759.
On Wall Street the defensive utilities sector had the strongest showing while the energy sector was among the weakest. "You’re at the end of the earnings season, economic data is all distorted because of the hurricanes, I don’t think there is going to be any clear picture until we get a firm yes or no for the tax bill," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
The Dow Jones Industrial Average fell 55.29 points, or 0.24%, to 23,384.41, the S&P 500 lost 7.42 points, or 0.29%, to 2,577.42 and the Nasdaq Composite dropped 19.04 points, or 0.28%, to 6,738.56.
The pan-European FTSEurofirst 300 index lost 0.57% and MSCI’s gauge of stocks across the globe shed 0.18%. Monetary policy was also on traders’ minds with the heads of the US, European, British and Japanese central banks attending a European Central Bank conference in Frankfurt.
The US two-year yield hit a nine-year peak just shy of 1.7%, up from Monday’s 1.687%. Benchmark 10-year notes last rose 5/32 in price to yield 2.3842%, from 2.4% late on Monday.
The mood in Asia was gloomy after China’s retail sales in industrial output data missed market expectations. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.4% in its third consecutive day of losses. Japan’s Nikkei was unchanged after four sessions of losses.
Oil declined on Tuesday for a third day as evidence of rising US output and a gloomier outlook for demand growth in a report from the International Energy Agency (IEA) weighed on prices. US crude fell 2.52% to $55.33 per barrel and Brent was last at $61.51, down 2.61% on the day.
Gold edged down to $1,272.50 an ounce.