GLOBAL MARKETS-Stocks, yields slip as investors await next catalyst
(Adds close of European markets)
* Powell repeats view on inflation, economic recovery
* European shares sag after late dip in U.S. stocks
* China data points to slowing recovery
NEW YORK/LONDON, July 15 (Reuters) – A measure of global equity markets slid from near record highs, the dollar edged higher and bond yields fell on Thursday as investors mulled the Federal Reserve’s benign inflation outlook and upbeat assessment of the U.S. economy.
The number of Americans filing new claims for unemployment benefits fell to a 16-month low last week as the U.S. labor market steadily gains traction while other data showed import prices rose solidly in June but have likely peaked.
Wall Street traded lower even as the four largest U.S. consumer banks posted blockbuster second-quarter results earlier this week that were above analysts estimates. Financials were the biggest S&P sector to advance, followed by industrials and materials. The other eight sectors fell.
“Guidance is the name of the game. A lot of good news is already baked into the market and even with strong guidance, you may get a breather here,” said Tom Hayes, founder and managing member of Great Hill Capital LLC.
Analysts expect strong earnings, with IBES data from Refinitiv showing consensus looking for a 65.8% gain from a year ago, making corporate guidance more important than results.
“We had the rally going into the earnings season. Now that we’re actually here, we’re seeing some softness. I wouldn’t be surprised if we don’t see a lot of strength during this reporting season,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
The MSCI world equity index, which tracks shares in 50 countries, fell 0.41% to 723.13. Europe’s broad FTSEurofirst 300 index closed down 0.92% at 1,761.30.
On Wall Street, the Dow Jones Industrial Average fell 0.04%, the S&P 500 lost 0.39% and the Nasdaq Composite dropped 0.79%.
The 10-year Treasury note fell 3.2 basis points to yield 1.324%, while the dollar index, which tracks a basket of six currencies, rose 0.22% to 92.621.
The index has climbed in recent weeks as investors take stock the Fed’s increasingly upbeat assessment of the U.S. economy, which has brought forward the timeframe for its next rates rise. But rates have been falling on Japanese buying and less available bonds available for purchase.
Oil prices edged lower on Thursday, as investors braced for increased supplies after a compromise agreement between leading OPEC producers and after a surprisingly low weekly reading on U.S. fuel demand.
Brent crude fell $0.25 to $74.51 a barrel. U.S. crude slid $0.21 to $72.92 a barrel.
China’s economic data showed average growth surpassed the first quarter, while June retail sales and industrial output beat expectations. But it also showed authorities, which only last week injected 1 trillion yuan into the financial system, will ensure conditions stay loose.
The World Health Organization (WHO) COVID-19 dashboard reported the first weekly rise in global deaths from the virus in 10 weeks and a 5.6% jump in daily case numbers on Wednesday.
“The market is fearing the Delta variant could take a hold of different economies so you are almost seeing that we are back to the ‘bond yields lower, tech doing well’ scenario,” said Justin Onuekwusi, portfolio manager at Legal & General Investment Management.
The likes of Amazon and Google are up 6-8% this month, while China’s biggest tech firms Alibaba and Tencent have surged more than 12% since China’s central bank made a supportive policy tweak for the first time in nearly a year on Friday.
The Chinese yuan dipped to 6.4628 per dollar in Asia after hitting a three-week high of 6.4508 overnight.
Gold jumped to a one-month high of $1,829.8 per ounce on Wednesday and last stood at $1,827.9.
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