Global Stocks Follow Wall Street Lower
June 12 2019 - 4:33AM
Dow Jones News
By Nathan Allen
Global stocks dropped on Wednesday, a day after Wall Street
indexes broke a weeklong winning streak amid lingering trade
tensions and questions over the direction of Federal Reserve
policy.
In Europe, the Stoxx Europe 600 was down 0.6% at the open, while
Germany's DAX slipped 0.5% and the U.K.'s FTSE 100 fell 0.3%.
In Asia, China's Shanghai Stock Exchange dropped 0.6%, Korea's
Kospi fell 0.1% and Japan's Nikkei 225 fell 0.4%
Hong Kong's Hang Seng was the region's worst performer, dropping
2% as protesters blocked access to the legislature, forcing
lawmakers to postpone debate on an unpopular bill that would allow
people to be extradited to China.
U.S. futures pointed to opening declines of 0.3% for the S&P
500 and the Dow Jones Industrial Average, extending yesterday's
modest losses. Both indexes fell less than 0.1% on Tuesday.
Equity markets in the U.S. had risen sharply in the prior week
after Federal Reserve officials hinted that the central bank might
lower interest rates to offset the negative effects of trade
disputes. However, some analysts say markets may have overestimated
the likelihood of such a rate cut, given recent positive economic
data.
Ipek Ozkardeskaya, senior market analyst at London Capital
Group, said heightened expectations of a rate cut may now force the
Fed to act sooner than intended to avoid disappointing the market
and driving up stock-market volatility over the summer.
Later Wednesday, investors will be watching for May consumer
inflation data in the U.S, which is expected to rise 0.1% from
April's level -- the smallest monthly gain since January. Weak
inflation is likely to fuel further speculation over the Fed
cutting rates and may weigh on the dollar, according to forex
broker FXTM.
In Europe, investors will be watching European Central Bank
President Mario Draghi speak in Frankfurt later this morning for
any hints that the ECB is considering a similarly dovish
stance.
"By Draghi's own admission there was some discussion of further
policy easing at last week's meeting, however given the weakness of
Europe's banks, further cuts in rates could well do more harm than
good," CMC Markets U.K. chief market analyst Michael Hewson
said.
The yield on 10-year U.S. Treasurys slipped to 2.129% from
2.140% on Tuesday. Bond yields move in the opposite direction to
prices. The WSJ Dollar Index, which tracks the dollar against a
basket of 16 currencies, was flat.
In commodities, global oil benchmark Brent crude fell 1.8% to
$61.16 a barrel, after data from the American Petroleum Institute
showed that U.S. crude stockpiles climbed more than expected last
week, and the U.S. Energy Information Administration lowered its
forecasts for 2019 demand growth. Gold gained 0.7%.
Write to Nathan Allen at nathan.allen@dowjones.com
(END) Dow Jones Newswires
June 12, 2019 04:18 ET (08:18 GMT)
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