Global shares edge lower, Treasury yields down ahead of US jobs data

Reading Time: 4 minutes

Global equity markets edged lower on Monday, though supported by US  shares hitting new highs, while Treasury bond yields eased and the dollar was little changed as investors awaited jobs data that could sway Federal Reserve monetary policy.

MSCI’s all country world index, which tracks shares across 50 countries, fell 0.1%, as markets in Europe fell. But fresh highs by the S&P 500 and the Nasdaq offset the declines in the major French, German and UK bourses because the global index is US-centric.

Weaker-than-expected US inflation and news of a possible bipartisan US infrastructure agreement boosted risk appetite as the week opened.

The infrastructure plan is valued at $1.2 trillion over eight years, of which $579 billion is new spending.

The plan is less than the White House’s initial proposal, but the total amount is likely to be greater than Republicans’initial figure and may lead Congress to spread the initiative across two bills, said Solita Marcelli, UBS’ chief investment officer for the Americas for its global wealth management division.

While that could provide a tailwind for the reflation trade, Marcelli said “(the spending) will be spread out over a multi-year period, and tax increases could be part of the mix. So, the stimulative impact on markets overall may not be very large.”

Stock markets across the world rebounded last week, but growing concern about the spread of the Delta variant of the COVID-19 virus, particularly in Asia, took some shine off on Monday.

Indonesia is battling record-high cases, Malaysia is set to extend a lockdown and Thailand has announced new restrictions.

European stocks, as measured by the pan-European STOXX 600 index, closed down an unofficial 0.53%, still near record highs.

Germany’s DAX fell 0.34%, while France’s CAC 40 slid 0.89% and Britain’s FTSE 100 index dipped 0.88%.

Travel and leisure stocks took a particular hit, with the region’s sectoral index falling to a one-month low.

On Wall Street, the Dow Jones Industrial Average fell 167.9 points, or 0.49%, to 34,265.94, the S&P 500 gained 2.4 points, or 0.06%, to 4,283.1 and the Nasdaq Composite added 99.23 points, or 0.69%, to 14,459.62.

Canada’s Toronto Stock Exchange’s S&P/TSX composite index hit an all-time high of 20,273.6 early on Monday.

It later erased those gains, as the energy sector fell 2.5% on the lower price of oil.

Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.16 points or 0.02%, to 703.61.

Australian shares slipped 0.1%.Japan’s Nikkei and South Korea’s benchmark KOPS were barely changed.

Chinese shares were a touch higher, with the CSI 300 index up 0.2%.

Data over the weekend showed profit growth at China’s industrial firms slowed again in May, as surging raw material prices squeezed margins and pressured factory activity.

Investors will keep a close eye on official factory activity from China due on Wednesday.

The manufacturing reading is expected to slow to 50.7 from 51.

The private sector Caixin Manufacturing PMI will follow later in the week.

Oil prices slipped on Monday after hitting more than 2-1/2 year highs early in the session, hurt by the spike in COVID-19 cases in Asia ahead of this weeks OPEC+ meeting.

Brent crude settled down $1.50, or 1.97%, at $74.68 a barrel.

US crude was last down $1.12, or down 1.51%, at $72.93 per barrel.

On Friday, a closely-watched US jobs report, which could point to strong labor demand, will be released for June.

Yields for benchmark 10-year US Treasuries fell, last down 5.6 basis points at 1.4765%.

Last week, it notched its largest weekly gain since March.

The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.047 points or 0.05%, to 91.898.

The yen was last down 0.21%, at $110.5400.

Spot gold was steady at $1,779.70 per ounce by 13:31 p.m. EDT (1731 GMT).

US gold futures settled up 0.2% at $1,780.70.