Stocks, yields ease as data suggests US economy cooling

Oil prices ease after Monday's rally as dollar index declines

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Traders at the New York Stock Exchange. The Dow Jones Industrial Average fell 173.34 points, or 0.52 per cent, to 33,427.81. - Reuters

By Reuters

Published: Tue 4 Apr 2023, 8:07 PM

World stock indexes declined on Tuesday, with the S&P 500 down and Treasury yields easing after data suggesting a cooling in the US labour market.

The US Labour Department report showed US job openings in February dropped to the lowest level in nearly two years.

In addition, a separate report showed new orders for US-manufactured goods fell for a second straight month in February amid ebbing demand for civilian aircraft.

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The S&P 500 was pressured the most by the economically sensitive industrial sector, which was last down 2 per cent. Materials were also lower.

The yield on two-year Treasuries, which typically moves in step with interest rate expectations, fell 12.2 basis points to 3.858 per cent, while the benchmark 10-year note’s yield slid 4.5 basis points to 3.387 per cent.

Crude oil prices also eased after Monday’s sharp rally tied to Sunday’s announcement of an output target cut by the Organisation of the Petroleum Exporting Countries (Opec) and its partners.

US crude recently fell 0.27 per cent to $80.20 per barrel and Brent was at $84.56, down 0.44 per cent on the day.

The spike in oil prices has added to concerns about higher costs for businesses and consumers, but some investors think US data signaling some cooling in the economy could possibly allow the Federal Reserve to loosen monetary policy.

The Dow Jones Industrial Average fell 173.34 points, or 0.52 per cent, to 33,427.81; the S&P 500 lost 16.95 points, or 0.41 per cent, to 4,107.56; and the Nasdaq Composite dropped 42.95 points, or 0.35 per cent, to 12,146.50.

The pan-European STOXX 600 index rose 0.02 per cent and MSCI’s gauge of stocks across the globe shed 0.11 per cent.

Shares of Glencore, whose bid for Teck Resources was rebuffed by the Canadian copper miner the day before, rose.

The Fed and other central banks have been raising interest rates to bring down inflation, and investors have been trying to gauge how much longer the tightening cycle will continue.

“Cooling down of the labor market is one of the things necessary to combat inflation,” said Andrzej Skiba, head of the BlueBay US fixed income team at RBC Global Asset Management in New York.

The US dollar index was last down 0.5 per cent, while the euro was up 0.6 per cent at $1.0963.

The Australian dollar came under pressure after the Reserve Bank of Australia left interest rates unchanged after 10 straight increases. It was last down 0.7 per cent against the US dollar at $0.6737.

Spot gold added 1.9 per cent to $2,021.19 an ounce.

Reuters

Published: Tue 4 Apr 2023, 8:07 PM

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