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Stocks, dollar ease on growth, inflation concerns

Stock MarketsOct 04, 2021 05:34PM ET
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2/2 © Reuters. FILE PHOTO: A man watches an electric board showing Nikkei index outside a brokerage at a business district in Tokyo, Japan, June 21, 2021. REUTERS/Kim Kyung-Hoon 2/2

By Herbert Lash

NEW YORK (Reuters) - The dollar eased and a gauge of global equity markets fell on Monday as investors worried about the potential for renewed U.S.-China trade tensions, stalled talks in Congress and rising inflation as oil prices surged to multi-year highs.

U.S. Treasury yields rose on investor caution about the need to raise the government's debt ceiling as the United States faces the risk of a historic default in two weeks.

Oil jumped after Reuters reported the Organization of Petroleum Exporting Countries and allies would stick to their current output policy instead of boosting supply more.

Brent crude futures settled up $1.98 at $81.26 a barrel, while U.S. crude rose $1.74 to settle at $77.62 a barrel.

New orders for U.S.-made goods accelerated in August, pointing to sustained strength in manufacturing even as economic growth appeared to slow in the third quarter due to shortages of raw materials and labor.

Manufacturing is still being hobbled by global supply-chain issues, while data last week showed high inflation sharply cut consumer spending in July, with a moderate rebound in August.

"The negatives are building and have been building for the last several weeks during this bit of a downturn that we've seen," said Tim Ghriskey, chief investment strategist at Inverness Counsel.

Top U.S. trade negotiator Katherine Tai pledged to unwind some tariffs imposed by former President Donald Trump on goods from China while pressing Beijing to keep its promises.

Tai said Washington seeks to stop China from pouring billions of dollars of state subsidies into its semiconductor, steel and other industries.

"In the past, escalation of U.S.-China trade tensions has sparked risk off among investors," said Marc Chandler, chief market strategist at Bannockburn Global Forex.

MSCI's all-country world index fell 1.0% to 705.53, its lowest close since May 21, while the broad STOXX Europe 600 index closed down 0.47%.

In late trading on Wall Street, the U.S. Senate prepared to vote on a bill passed in the House of Representatives that would extend the U.S. debt limit to December 2022, eliminating one deadlock in Congress that has unsettled investors.

Earlier, President Joe Biden said a planned $3.5 trillion social spending bill that stalled last week in Congress will be smaller than progressive lawmakers would like.

The Dow Jones Industrial Average fell 0.94% to 34,002.92, the S&P 500 lost 1.30% to 4,300.46 and the Nasdaq Composite dropped 2.14% to 14,255.49 as investors dumped Big Tech stocks in the face of rising Treasury yields.

The dollar weakened from last week's one-year highs as investors looked ahead to the release on Friday of September employment data, which could signal when the Federal Reserve begins to taper asset purchases.

Gold prices rose to a more than one-week high on the weaker U.S. currency and risk off sentiment in equity markets lifted demand for the safe-haven metal.

The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.15% to 93.805.

The euro rose 0.22% to $1.162, while the yen traded slid 0.11% at $110.930.

U.S. Treasury yields rose as the market fretted about the debt ceiling, social spending bills and hurdles with infrastructure legislation.

"The market is really focused on Washington, D.C., and the uncertainty of being unable to come to agreement on the infrastructure, social spending plan and raising the debt limit," said Thomas Hayes, managing member at hedge fund Great Hill Capital LLC.

The yield on 10-year U.S. Treasury notes rose 1.5 basis point to 1.4824%, after trading above 1.5%.

Adding to the growth worries, investor morale in the euro zone fell for the third month in a row in October.

GRAPHIC-U.S. nonfarm payrolls https://fingfx.thomsonreuters.com/gfx/mkt/zdpxodwzqvx/Pasted%20image%201632930945719.png

GRAPHIC-U.S. inflation https://fingfx.thomsonreuters.com/gfx/mkt/egpbkyxxmvq/21O04A.png

Stocks, dollar ease on growth, inflation concerns
 

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Comments (10)
Vinod Panthi
Vinod Panthi Oct 04, 2021 9:10PM ET
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today us30 up????????
TARA CHAND AGRAWAL
TARA CHAND AGRAWAL Oct 04, 2021 1:54PM ET
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CRUDE prices have been falling due to hedge funds now almost FUELED buying countries have ful now completely done.Supports 70 usd
john dislias
john dislias Oct 04, 2021 1:54PM ET
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Sell the stupid news for the world
Hunt Richardson
Hunt Richardson Oct 04, 2021 8:45AM ET
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Reuters aren't you tired of using the word "fear" in your headlines again? Overused for a long time
IceIce Baby
IceIceBaby Oct 04, 2021 2:42AM ET
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Never ever grande.
David SheepofCCP
David SheepofCCP Oct 04, 2021 1:15AM ET
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We Chinese do business with only who we know. In America, you have ponzi and pyramid schemes, but in China, it's called quanxi. For one Evergrande, there are ten more behind it. How else can you explain our double digit GDP growth when 30 to 40 percent is in construction? We waiting....Thank goodness our grand pooh-ba Xi will be our savior while foreign bondholders will be left holding the bag. LOL
William Smith
William Smith Oct 04, 2021 12:37AM ET
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Everyone is so worried about inflation that gold has crashed, bitcoin has crashed and bond yields are near all time lows.
James Pattison
James Pattison Oct 04, 2021 12:37AM ET
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You cant get yield on bonds or savings that outpace inflation… so you hide it in stocks… like venezuela…
James Pattison
James Pattison Oct 04, 2021 12:37AM ET
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Are you familiar with the term “bubble??”
mad god
mad god Oct 04, 2021 12:15AM ET
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i told u guys.. china will survive even all properties go to zero value
IceIce Baby
IceIceBaby Oct 04, 2021 12:15AM ET
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Communism as its best. :)
Aaseevakan Thurai
Aaseevakan Oct 04, 2021 12:05AM ET
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worst than video game. crazy write up...lol
Minmin Minmin
Minmin Minmin Oct 04, 2021 12:05AM ET
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perplexed76 .
perplexed76 . Oct 03, 2021 11:28PM ET
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positive mood was spoiled a little by bad news from real world.
Adnan Azam
Adnan Azam Oct 03, 2021 11:27PM ET
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Mr.Sano . you might want to update.. evergrande has a new leading investor for 51% of its share value..
 
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