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© Reuters. PHOTO OF THE FILE: A man wearing a mask walks through the Shanghai Stock Exchange building in the Pudong Financial District of Shanghai, China on February 3, 2020. REUTERS / Aly Song
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By Herbert Lash and Simon Jessop
NEW YORK / LONDON (Reuters) – The dollar rose on Friday after confirming good US retail sales data as the economy accelerated in the second quarter, but global stock markets fell as investors faced inflation expectations and interest rates could begin to rise.
Oil markets were the biggest drop of the week since at least May, as traders could increase their supply of expected OPEC producers to meet rising demand, as the economy recovered from the coronavirus pandemic.
How quickly this happens, however, is uncertain, as coronavirus infection rates have revived in several countries, especially in Africa and parts of Asia, as the Delta variant remains the same.
MSCI’s global index, the broad breadth of global equities, fell 0.36%, as some of the gains first made by European markets fell. The pan index fell 0.77% to 1,747.79.
Shares of Wall Street initially rose The Department of Commerce said retail sales rose 0.6% in June as demand for goods was strong, although spending shifted to services.
Earnings are up quite a bit from two years ago and inflation is likely to hover around 2.6%, excluding last year’s low base effect, said Jason Pride, Philadelphia’s top private wealth investment firm in Philadelphia.
“That should ultimately be acceptable in the (stock) market and allow for continued upward operation,” Pride said. “My only doubt is that stock market valuations are high.”
Although companies with only 11% of market capital reported second-quarter results, earnings outperformed 22.1% in aggregate, with Jonathan Golub the chief US capital strategist Swiss credit (SIX 🙂 he said in a note.
Economically sensitive industries, energy, consumer discretion, finance and materials are expected to more than double profits, while non-major and non-cyclical technologies are expected to grow by 36% and 10%, respectively, Golub said.
It was down 0.29%, the S&P 500 was down 0.15% and the trade was close to equal, down 0.05%.
Gold prices were stronger dollars and yields slightly higher, and the appeal was trimmed as bond yields slowed after Federal Reserve Chairman Jerome Powell took “strong support” to ensure the U.S. economic recovery this week.
The benchmark yield rose 1.8 points to 1.3154%.
Mark Haefele, Investment Director at UBS Global Wealth Management, an advisor to many of the world’s super-rich, said he expects rates to rise higher as the recovery fully takes place.
“We believe the downward trend in yields will be reversed as confidence in the economic recovery increases. However, we see a rebound of 2% in 10-year yields by the end of the year, in line with the steady rise in equities.”
In Europe, Germany’s 10-year yield on prudent trade fell to a new three-month low ahead of next week’s European Central Bank meeting.
In foreign exchange, the major currencies changed little on the day, but the dollar achieved its best weekly earnings in about a month. Money, against the basket with six currencies, rose 0.134% to 92,707.
The euro fell 0.08% to $ 1,1803, while the yen rose 0.25% to $ 110,1400.
Oil prices increased losses in the previous two sessions.
It fell $ 0.33 to $ 73.14. it slipped $ 0.34 and $ 71.31 a barrel.
The US fell 0.3% to $ 1,824.20 an ounce.
Overnight in Asia, the MSCI lost its broadest Asia-Pacific stock index outside Japan by 0.4%, China’s chip index fell 1.1% and Taiwan shares fell 0.8%.
The weakness in Asia was largely due to TSMC, Asia’s largest company, due to low earnings from market capitalization outside China, whose shares fell 4.1%.
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