NEW YORK, Sept 26 — European shares climbed yesterday as oil prices above US$80 (RM330) a barrel lifted energy stocks, while US stocks slid on losses in chipmakers and rate-sensitive shares ahead of an expected Federal Reserve interest rate hike.
US consumer confidence also unexpectedly rose in September, lifting it to levels last seen in 2000, the Conference Board said, underscoring strength in the labour market and overall economy.
The Dow Jones Industrial Average fell 69.72 points, or 0.26 per cent, to 26,492.33, the S&P 500 lost 4.38 points, or 0.15 per cent, to 2,914.99 and the Nasdaq Composite added 10.05 points, or 0.13 per cent, to 8,003.29.
The pan-European FTSEurofirst 300 index rose 0.54 per cent and MSCI’s gauge of stocks across the globe gained 0.02 per cent.
“A lot of the noise around trade and anything else around politics really hasn’t suppressed consumer confidence nearly to the degree that the other factors have boosted it,” said Mike Dowdall, investment strategist for BMO Global Asset Management, in Chicago.
Brent crude futuresshot to four-year highs of almost US$82 a barrel, catapulted by imminent US sanctions on Iranian crude exports and the apparent reluctance of Opec and Russia to raise output to offset the potential hit to global supply.
“The combination of tight supply, healthy demand, falling global inventories — down from already under-stored levels — and anemic spare capacity helps support an oil price which could end the year above US$90,” Richard Robinson, manager of Ashburton’s Global Energy Fund, said.
US crude oil futures settled at US$72.28 per barrel, up 20 cents or 0.28 per cent. Brent settled at US$81.87, up 67 cents or 0.83 per cent.
The rise in energy shares, however, failed to squash broader market pessimism after new tariffs imposed by Beijing and Washington on each other’s goods kicked in on Monday, and Chinese Vice Commerce Minister Wang Shouwen accused the United States of putting “a knife to China’s neck.”
There are other big worries for investors too, not least the timing and pace of central bank policy tightening.
While the Fed is poised to hike rates for a third time in 2018 this week, European Central Bank President Mario Draghi on Monday raised expectations the euro zone will also start to normalise policy over the coming year by referring to “relatively vigorous” underlying inflation and brisk wage growth.
That pushed German 10-year bond yields to four-month highs above 0.5 per cent.
US 10-year Treasury yields held at a new four-month high above 3.10 per cent after a US$38 billion government debt sale yesterday.
Benchmark 10-year notes last fell 7/32 in price to yield 3.1039 per cent, from 3.078 per cent late on Monday.
The US dollar weakened ahead of the Fed’s two-day policy meeting, as investors have already priced in two more interest rate increases this year and some in 2019, leaving little room for further currency gains.
The US dollar index fell 0.05 per cent, with the euro up 0.16 per cent to US$1.1765.
Since mid-August, the dollar has declined 3.1 per cent against that basket of currencies.
“The US dollar appears vulnerable… given extended speculative bullish positioning against most of the G10 currencies and considerable tightening already reflected in fed funds futures,” said Eric Theoret, currency strategist at Scotiabank in Toronto.
Source: The Malay Mail Online