NEW YORK, Aug 23 ― An index of stock markets worldwide crept lower yesterday on uncertainty over the outlook for US interest rate cuts and weak US manufacturing data that raised concerns about the health of the world’s largest economy.
US manufacturing industries in July recorded their first month of contraction in almost a decade amid concerns about whether the US-China trade conflict would tip the economy into a recession, a private survey showed.
“Manufacturing has been pretty weak across the globe for a while now and we are starting to see that bleed into the US,” said Joe Mallen, chief investment officer at Helios Quantitative Research.
Investors’ focus, however, remained firmly on today’s speech by Federal Reserve Chair Jerome Powell at a Jackson Hole, Wyoming, event, which could offer clarity on the direction of US monetary policy.
The Fed has come under increasing pressure to cut borrowing costs more, including a call by President Donald Trump on Wednesday for the central bank to reduce its benchmark rate.
The MSCI world equity index, which tracks shares in 47 countries, was down 0.25 per cent.
On Wall Street, stocks finished a choppy session nearly unchanged. While strong results from retailers bolstered confidence in consumer demand and lifted shares, the manufacturing data and uncertainty about the interest rate outlook kept investors in check.
The Dow Jones Industrial Average was the strongest of the three US major stock indexes, helped by a 4.24 per cent jump in Boeing’s shares after a Reuters report that the company has told suppliers it will resume production of its best-selling 737 jets at a rate of 52 aircraft per month in February 2020.
The Dow rose 49.51 points, or 0.19 per cent, to finish at 26,252.24, the S&P 500 lost 1.48 points, or 0.05 per cent, to end at 2,922.95 and the Nasdaq Composite dropped 28.82 points, or 0.36 per cent, to close at 7,991.39.
“The market is pausing as investors are waiting for big news tomorrow on Chairman Powell’s speech,” said James Ragan, director of wealth management research at DA Davidson in Seattle.
European shares, which found support from upbeat surveys on Germany and the euro zone, declined on a report that the Bundesbank sees no need for German fiscal stimulus right now. The pan-European STOXX 600 index closed down 0.40 per cent.
In currency markets, the dollar slipped 0.1 per cent against a basket of other major currencies to 98.193, but moved within narrow ranges as investors awaited more clues from the Fed.
While the Fed’s latest minutes showed US policymakers are reluctant to begin a big rate-cutting cycle in the coming months, market participants still expect it to signal a stimulus measure, or an affirmation that the US central bank is on a steady path to ease interest rates, a scenario viewed as negative for the dollar.
Kansas City Fed President Esther George and Philadelphia Fed President Patrick Harker said on Thursday the US central bank currently does not need to deliver more stimulus to the economy after it cut rates for the first time in more than a decade last month.
US Treasury yields climbed as comments from Fed officials dampened hopes of future interest rate cuts.
Benchmark 10-year notes were down 10/32 in price to yield 1.6131 per cent, up from 1.577 per cent late on Wednesday.
Oil prices weakened as worries about the global economy weighed.
Brent crude settled down 38 cents, or 0.6 per cent, at US$59.92 (RM250.94) a barrel, while US West Texas Intermediate crude ended the session 33 cents, or 0.6 per cent lower at US$55.35.
Source: The Malay Mail Online