NEW YORK (Reuters) – MSCI’s global index of stocks kicked off fourth-quarter trading with a decline, while U.S. Treasury yields and the dollar rose after a last-minute deal averted a partial U.S. government shutdown.
While U.S. indexes were a mixed bag in morning trading, in Europe stocks lost earlier gains after September PMI data, a key indicator of economic health, showed manufacturing activity remains in a broad-based downturn.
It was enough to nudge the euro back into the red for the day. The single currency fell more than 3% in the third quarter, unable, like many major global peers, to fend off irresistible U.S. dollar strength on ongoing Federal Reserve interest rate rises.
An 11th-hour stopgap funding bill will allow the U.S. government to keep operating through Nov. 17, and means key data releases including Friday’s monthly payrolls report can go ahead on time.
Delayed data could have intensified market uncertainties by keeping the Fed on the sidelines.
“If we had had a shutdown, that really would have put the Fed in a really tough spot for that November meeting,” said Michael Lorizio, senior fixed income trader at Manulife Investment Management in Boston.
“You would have essentially had to price out any chance of any sort of Fed action if they had no data to base their next move on.”
The Dow Jones Industrial Average fell 121.03 points, or 0.36%, to 33,386.47, the S&P 500 lost 5.36 points, or 0.12%, to 4,282.69 and the Nasdaq Composite added 65.87 points, or 0.5%, to 13,285.19.
The pan-European STOXX 600 index lost 1.21% and MSCI’s gauge of stocks across the globe shed 0.56%.
In U.S. Treasuries, benchmark 10-year notes were up 10.3 basis points at 4.674% from 4.571% late on Friday. The 30-year bond was last up 8 basis points to yield 4.7892% from 4.709%.
The 2-year note was last was up 6.4 basis points to yield 5.1104% from 5.046%.
In currencies, the dollar index rose 0.565%, with the euro down 0.69% to $1.0497. The Japanese yen weakened 0.34% versus the greenback at 149.83 per dollar.
“We are closely watching market moves with a strong sense of urgency,” Japanese Finance Minister Shunichi Suzuki told Reuters, referring to the currency nearing the 150 per dollar threshold for a potential intervention.
He declined to comment on whether that was a possibility at this point.
Oil prices pared gains after earlier climbing $1, with questions around global supply and demand, and ahead of comments from the Fed chair that could offer insight on future interest rate moves.
U.S. crude fell 2.07% to $88.91 per barrel and Brent was at $90.84, down 1.48% on the day.
Gold was on track for its sixth consecutive loss, hitting a near seven-month low as a robust dollar and prospects of higher U.S. interest rates took the shine off bullion.
Spot gold dropped 1.1% to $1,828.70 an ounce, while U.S. gold futures fell 0.65% to $1,836.00 an ounce.
(Additional reporting by Karen Brettell in New York, Marc Jones in London and Kevin Buckland in Tokyo; Editing by Nick Macfie, Mark Potter and Jan Harvey)
