Stock markets slid Tuesday as investors saw few reasons to pursue recent strong gains as they await a key speech by US Federal Reserve chief Jerome Powell that could provide more hints about when interest rates could start to fall.
In New York, the main shares were all slightly lower at midday after having risen the last eight sessions in a row. In Europe, the main indexes all closed lower, still leaving them well up from the beginning of last week.
Gold broke to a fresh record above $2,520 — a third successive day of new peaks — on Fed rate cut bets that would make the yellow metal more attractive to investors.
US shares rose strongly last week as data indicated that US inflation is slowing and labour market softening.
That soothed fears of a recession, while still leaving the door open for the Fed to finally start unwinding its long-running tight monetary policy.
But there were few incentives Tuesday to keep bidding up prices.
“Today looks like a waiting game ahead of Federal Reserve minutes due tomorrow and a host of retail earnings the rest of the week,” said Joe Mazzola, a strategist at Charles Schwab.
Earnings from retailer Lowe’s on Tuesday, and Target and TJX Wednesday, should provide more insight into consumer confidence after reassuring retail sales figures last week.
But the main focus is on Powell this Friday when he speaks to the annual gathering of global central bankers at Jackson Hole, Wyoming, where he could give signals about the Fed’s plans for borrowing costs.
Bets have surged that officials will cut rates by 25 basis points next month — with some even flagging 50 points — followed by two more before the end of the year.
Powell raised hopes for a move at the bank’s most recent meeting when he said it could come “as soon as” September, having previously said the Fed did not need to wait for inflation to fall to its two-percent target before reducing rates.
San Francisco Fed chief Mary Daly told the Financial Times she had “more confidence” inflation is being tamed following recent data.
Her Minneapolis Fed colleague Neel Kashkari said in the Wall Street Journal that the prospect of a weaker labour market made talk of a reduction appropriate.
“Participants (are) once again embracing the soft landing scenario and the prospect of an imminent rate cut by the Federal Reserve. That consideration is effectively the best of both worlds,” said Patrick O’Hare, an analyst at Briefing.com.
Earlier in the day, Tokyo rallied 1.8 percent, clawing back all of Monday’s losses, while Sydney, Seoul, Singapore, Taipei, Manila, Mumbai, Bangkok and Jakarta were also up.
However, Hong Kong and Shanghai retreated after recent advances, while Wellington also fell.
In company news, Tokyo-listed 7-Eleven owner Seven&i Holdings dropped more than 10 percent a day after surging almost 23 percent on news it had received a takeover bid from Canadian retail giant Alimentation Couche-Tard, the operator of Circle K.
The deal, which could be worth as much as $38.6 billion, would mark one of the biggest foreign acquisitions of a Japanese firm.
The dollar continued to slip against the euro, yen and pound on expectations that the interest rate differential in favour of the greenback would narrow.
Oil prices fell on expectations of a Gaza ceasefire, which would help alleviate tensions in the Middle East.
– Key figures around 1540 GMT –
New York – Dow: DOWN 0.3 percent at 40,765.14
New York – S&P 500: DOWN 0.3 percent at 5,593.79
New York – Nasdaq Composite: DOWN 0.4 percent at 17,813.28
London – FTSE 100: DOWN 1.0 percent at 8,273.32 points (close)
Paris – CAC 40: DOWN 0.2 percent at 7,485.73 (close)
Frankfurt – DAX: DOWN 0.4 percent at 18,357.52 (close)
EURO STOXX 50: DOWN 0.3 percent at 4,857.58 (close)
Tokyo – Nikkei 225: UP 1.8 percent at 38,062.92 (close)
Hong Kong – Hang Seng Index: DOWN 0.3 percent at 17,511.08 (close)
Shanghai – Composite: DOWN 0.9 percent at 2,866.66 (close)
Euro/dollar: UP at $1.1105 from $1.1086 on Monday
Pound/dollar: UP at $1.3017 from $1.2989
Dollar/yen: DOWN at 145.75 yen from 146.61 yen
Euro/pound: DOWN at 85.29 pence from 85.33 pence
West Texas Intermediate: DOWN 0.6 percent at $73.91 per barrel
Brent North Sea Crude: DOWN 0.6 percent at $77.21 per barrel
gv/giv
