The euro fell against the U.S. dollar on Wednesday after data showing a surprise deterioration in German business morale stoked fears of slowing global growth and weighed on a gauge of world equity markets.
The decline in the Munich-based Ifo economic institute’s business climate index bucked expectations for a small improvement and sent U.S. Treasury yields reeling as investors piled into safe-haven bonds.
Reports of a sharp slowdown in Australian inflation also lifted bond prices, while Premier Li Keqiang in China said authorities should not underestimate the difficulties in the Chinese economy, adding to concerns about global growth.
Signals that China has put broader stimulus on hold curbed demand for European equities and overshadowed strong earnings from Credit Suisse and SAP, which led Germany’s DAX index index to close up 0.63 per cent at a six month high.
The 12.6-per-cent surge in the German software firm’s shares helped technology post its best days since August 2015, but all other major country indexes in Europe closed lower.
The pan-European STOXX 600 index closed down 0.09 per cent, while MSCI’s gauge of stock performance in 47 countries fell 0.33 per cent.
Canada’s main stock index fell on Wednesday, as financial shares slipped after Bank of Canada held interest rates steady and energy stocks dropped.
The Toronto Stock Exchange’s S&P/TSX Composite index was unofficially down 82.88 points, or 0.5 per cent, at 16,614.52.
Six of the index’s 11 major sectors were lower, led by a 2.3-per-cent dip in the energy sector despite oil hovering near six-month highs.
Baytex Energy Corp. fell 5.9 per cent, while Crescent Point Energy Corp. sat 5.6 per cent lower. Suncor Energy Inc. and Seven Generations Ltd. lost 3.5 per cent and 2.6 per cent, respectively.
Financial stocks finished 0.9 per cent lower. Royal Bank of Canada dipped 2.2 per cent, while Manulife Financial lost 1.2 per cent.
Leading the index were TFI International Inc., up 5.0 per cent, CannTrust Holdings Inc., up 4.7 per cent, and Detour Gold Corp., higher by 4.4 per cent.
Wall Street shrugged off some earnings misses and traded little changed. Boeing Co rose 0.4 per cent after the planemaker reported first-quarter free cash flow that was ahead of many analysts’ estimates, helped by improved performance from its 787 Dreamliner program.
U.S. corporate earnings have been much better than expected and are driving the benchmark S&P 500 and Nasdaq indexes to new highs, though the pace of gains should slow, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
“You’re seeing a transition, at least for today,” Arone said. “There are some concerns that outside the U.S. global growth continues to be disappointing and that’s weighing on shares.
Defensive sectors of the market - REITs, utilities and staples - are leading the way, whereas some of cyclical-oriented shares are struggling with the renewed growth concerns, he said.
The Dow Jones Industrial Average fell 59.34 points, or 0.22 per cent, to 26,597.05, the S&P 500 lost 6.43 points, or 0.22 per cent, to 2,927.25 and the Nasdaq Composite dropped 18.81 points, or 0.23 per cent, to 8,102.02.
The dollar index, which measures the U.S. currency against a basket of six major rivals, was up 0.12 per cent at 97.753, its highest since June 2017.
The euro was down 0.75 per cent at $1.1141, while the Japanese yen strengthened 0.4 per cent versus the greenback at 112.31 per dollar.
In a sign of bullish sentiment, the Treasury yield curve continued to steepen, hitting its widest level since November 2018. Benchmark 10-year notes rose 12/32 in price to push their yield down to 2.5253 per cent.
Oil prices steadied near six-month highs after data that showed U.S. stockpiles rose to their highest levels since October 2017. The data countered fears of tight supply resulting from OPEC output cuts and U.S. sanctions on Venezuela and Iran.
U.S. crude inventories rose 5.5 million barrels last week, the Energy Information Administration said, far more than analysts’ forecast of an increase of 1.3 million barrels.
Oil prices hovered near six-month highs on Wednesday after data showed U.S. crude stockpiles surged to their highest levels since October 2017, countering fears of tight supply resulting from OPEC output cuts and U.S. sanctions on Venezuela and Iran.
Brent crude futures rose 6 cents to settle at $74.57 a barrel. The international benchmark reached $74.73 a barrel on Tuesday and Wednesday, highest since Nov. 1.
U.S. West Texas Intermediate crude futures were under more pressure from the build in domestic stocks, and ended 41 cents lower at $65.89 a barrel. On Tuesday, WTI hit $66.60, the highest since Oct. 31.
U.S. crude inventories rose 5.5 million barrels last week, the Energy Information Administration said, far more than analysts’ forecast of an increase of 1.3 million barrels.
Crude output in the United States, which turned into the world’s top producer last year, last week edged back to its record high at 12.2 million barrels per day while net imports jumped 900,000 bpd, EIA data showed.
Reuters