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US equities pull back from records as oil climbs

Sep 13 2017 16:12
Robert Brand and Brendan Walsh

Cape Town - Stocks pulled back from the rally that had pushed equities to records as oil jumped on a forecast for rising demand.

The S&P 500 Index slipped and the Stoxx Europe 600 headed for the first drop in six days after US and global benchmarks closed at all-time highs a day earlier. Miners led the decline in Europe as the price of industrial metals retreated.

Oil advanced to a five-month high after the International Energy Agency said demand will climb this year by the most since 2015. Treasuries and the dollar were little changed after U.S. data showing subdued price pressures.

Record stock prices are provoking concern in some corners of the market, with the number of investors seeking protection from a possible plunge jumping. Leon Cooperman, the billionaire founder of hedge fund Omega Advisors, says a correction could start “very soon.”

The reduction of bond purchases by central banks in coming months will put pressure on riskier assets including high-yield bonds and equities, according to Citigroup.

“Central banks will tread carefully and the direct impact of global tapering on the real economy will likely be modest,” Citigroup economists led by Ebrahim Rahbari wrote in a report. “But there is a material risk in our view that major asset price corrections could be triggered by this global tapering.”

Geopolitical concerns also continue to linger. North Korea said it will accelerate its plans to acquire a nuclear weapon that can strike the US homeland in its first response to fresh United Nations sanctions. Earlier, Treasury Secretary Steven Mnuchin warned the US may impose additional sanctions on China - potentially cutting off access to the American financial system - if it doesn’t follow through on the new UN restrictions.

Among the key events this week for markets:

• US consumer-price data on Thursday will be watched by investors for clues on the Fed’s policy-tightening path.

• The Bank of England will almost certainly leave policy unchanged on Thursday.

• Also scheduled this week is data on China’s August industrial production, retail sales and fixed-asset investment.

• Australia releases jobs numbers on Thursday.

Here are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.2% as of 9:31 New York time.

• The Stoxx Europe 600 Index dipped 0.1% the first retreat in more than a week on a closing basis. 

• The MSCI All-Country World Index slipped less than 0.1%.

• The MSCI Emerging Market Index declined 0.3%.

 The UK’s FTSE 100 Index sank 0.3%.

Currencies

• The Bloomberg Dollar Spot Index was little changed. 

• The euro fell 0.1% to $1.1953. 

• The British pound weakened 0.2% to $1.361.

Bonds

• The yield on 10-year Treasuries was little changed at 2.17%.

• Germany’s 10-year yield fell less than one basis point to 0.39%.

• Britain’s 10-year yield rose one basis point to 1.14%.

Commodities

• Gold slipped 0.1% to $1 329.80 an ounce. 

• West Texas Intermediate crude increased 0.9% to $48.64 a barrel. 

• Copper declined 1.7% to $2.98 a pound, the lowest in more than three weeks.

Asia

• The Topix index rose 0.6% at the close in Tokyo.

• Australia’s S&P/ASX 200 Index was little changed and the Kospi index in Seoul finished the session 0.2% lower.

• Hong Kong’s Hang Seng Index fell 0.3%, while the Shanghai Composite Index added 0.1%.

• The Japanese yen was little changed at 110.15 per dollar.

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equities  |  markets  |  global markets

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