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The violent rotation from tech to cyclical stocks, sparked by promising vaccine news, reversed Wednesday as investors cautiously watched a series of data suggesting a possible slowdown in economic growth. Treasury bonds rose.
The S&P 500 index retreated from a record high and the Dow Jones Industrial Average dropped below 30,000. The high-tech Nasdaq indices rose. US markets closed Thursday for a holiday, leading to a deluge of data that led to the first consecutive rise in weekly US jobless claims since July, an increase in durable goods orders and a widening trade deficit.
Small caps slumped. The Russell 2000 is still up 20% in November, heading towards the best month in its 41 year history. Gold stopped its slide, Bitcoin retreated from nearly a record high, and the 10-year Treasury yield fell.
Mediocre economic data clouded positive vaccine news and the formal start of President-elect Joe Biden’s transition to power – including the selection of Janet Yellen as Treasury Secretary – which fueled optimism about the outlook for risk assets. . At the same time, restrictions to curb rising coronavirus cases threaten to slow the global economic recovery. The MSCI global equities indicator froze on Wednesday after gaining 13% in November, still set for the best month since 1988.
“We remain on a fragile footing into the winter as cases continue to rise globally,” said Mike Loewengart, chief executive of investment strategy at E * Trade Financial. “And as the markets look to the future, this data is likely to be taken calmly. Markets tend to cheer for certainty, so the presidential transition and vaccine development are two factors he’s been hooked on lately. “
In Europe, the Stoxx Europe 600 index fell as cyclical stocks such as mining and energy companies declined, offsetting advances in defenses, including public utility stocks. ABN Amro Bank NV and Commerzbank AG fell more than 3% and led euro area lenders to the downside after the European Central Bank said the industry will likely need to set aside more money to absorb losses when the government’s pandemic support ends.
In addition to US economic data on Wednesday, traders will also be keeping an eye on the minutes of the latest Federal Open Market Committee meeting.
“Now, there are big risks ahead: FOMC minutes,” said Ilya Spivak, Chief Asia-Pacific strategist at DailyFX. “The concern is that the Fed will continue to signal that they are holding a non-intervention stance. No tightening, but not even a new easing. “
Elsewhere, oil held at around $ 45 a barrel in New York and copper briefly hit its highest since 2014. Bitcoin surpassed $ 19,000, a level it hadn’t surpassed since 2017.
Here are the main moves in the markets:
Actions
The S&P 500 Index slid 0.2% at 12:45 New York time.
The Stoxx Europe 600 index fell 0.3 percent.
The MSCI Asia Pacific index has changed little.
The MSCI Emerging Market Index fell 0.4 percent.
Currencies
The Bloomberg Dollar Spot Index has been slightly modified.
The euro gained 0.1% to $ 1.1901.
The British pound fell 0.2% to $ 1.3334.
The onshore yuan strengthened 0.3 percent to 6.574 per dollar.
The Japanese yen was slightly changed to 104.43 per dollar.
Bonds
The 10-year Treasury bond yield fell one basis point to 0.87%.
The yield on two-year Treasury bonds fell by less than one basis point to 0.16%.
Germany’s 10-year yield fell by one basis point to -0.58%.
Britain’s 10-year yield fell three basis points to 0.304%.
Japan’s 10-year yield fell by less than one basis point to 0.021%.
Raw material
West Texas Intermediate crude gained 0.8% to $ 45.25 a barrel.
Brent crude oil gained 0.8% to $ 48.23 a barrel.
Gold strengthened 0.3 percent to $ 1,812.70 an ounce.
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