The equities rally, which had been driven by declining interest rates and the Federal Reserve’s dovish turn, stalled on Thursday even after U.S. economic data that beat expectations initially turned the major indexes green
Asian shares pulled back on Thursday after Wall Street stalled a long winning streak, while Treasury yields were near five-month lows on hopes Britain’s soft inflation figures would be reflected in looming U.S. price data.
The equities rally, which had been driven by declining interest rates and the Federal Reserve’s dovish turn, stalled on Thursday even after U.S. economic data that beat expectations initially turned the major indexes green. A steeper-than-expected drop in British inflation also took markets by surprise.
Three US benchmark averages sharply dropped in the late session after touching their respective intraday highs, snapping a more-than-one-week winning streak. This could be because of an overbought market as rate cuts optimism ran out of steam, said Tina Teng, market analyst at CMC Markets.
Global government bond yields accelerated declining due to risk-off sentiment, Teng said.
European markets were set for a lower open, with the pan-region Euro Stoxx 50 futures 0.48 per cent lower, German DAX futures shedding 0.44 per cent and FTSE futures dropping 0.57 per cent.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.3 per cent lower, after U.S. stocks dipped to end sharply down in the earlier session. The index is 1.7 per cent higher so far this month.
U.S. stock futures, the S&P 500 e-minis, were up 0.33 per cent.
Australian shares were 0.45 per cent lower, dragged down by losses in commodity-related stocks, while Japan’s Nikkei stock index shed 1.55 per cent, dropping from near historical highs.
China’s blue-chip CSI300 index advanced 1.25 per cent, rebounding from a near five-year low touched in the earlier session. Foreign investors have been net buyers of Chinese shares so far on the day, following two sessions of selling.
Hong Kong shares tracked global markets down in morning trade but the benchmark Hang Seng Index added 0.14 per cent in the afternoon.
On Wednesday, an abrupt mid-afternoon plunge ended Wall Street’s impressive rally.
All three major U.S. stock indexes, which were at or near record highs this week, declined late in the session to close 1.3 per cent to 1.5 per cent below Tuesday’s close. The Dow Jones Industrial Average dropped 1.27 per cent, the S&P 500 shed 1.47 per cent and the Nasdaq Composite lost 1.5 per cent.
