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Global stocks dip as trade worries halt record rally, dollar falls

Kitco News

NEW YORK (Reuters) - Oil prices slumped and a gauge of global equity markets on Friday edged away from an all-time high it was near breaching earlier in the week as doubts simmered over the outlook for signing an initial deal to ease U.S.-China trade tensions.

Gold prices rose and stocks on Wall Street slipped after China warned on Thursday it would take “firm counter measures” against U.S. President Donald Trump’s decision to ratify a bill backing protesters in Hong Kong.

“It is definitely a concern that the signing of the Hong Kong bill will be seen as an impediment to an agreement,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“At this point, investors are also using this as an opportunity to take some profits,” Meckler said.

MSCI’s all-country world index, which tracks shares in 49 countries, shed 0.39%, or about 3 points lower than a record peak of 5550.63 it established in January 2018.

Country indices for Germany and France traded near break-even but the pan-European STOXX 600 index lost 0.34%.

The dollar fell from a six-week peak against a basket of currencies as the still unsigned U.S.-China trade deal kept investors on edge at the end of a holiday-shortened week due to the Thanksgiving holiday on Thursday and early close on Friday.

On Wall Street, the Dow Jones Industrial Average fell 86.62 points, or 0.31%, to 28,077.38. The S&P 500 lost 7.85 points, or 0.25%, to 3,145.78 and the Nasdaq Composite dropped 20.17 points, or 0.23%, to 8,685.00.

The MSCI world index has climbed 2.5% this month, its third straight month of gains, helped in part by hopes the world’s two biggest economies are moving toward a resolution. The trade war has roiled financial markets and disrupted supply chains.

The index is up over 20% this year, helped by lower interest rates and injections of government stimulus around the world.

Gold was on track to post its biggest monthly decline in three years as investors sought clarity on the U.S.-China trade front.

Spot gold added 0.3% to $1,462.38 an ounce.

The dollar index fell 0.09%, with the euro up 0.08% to $1.1016. The Japanese yen was flat versus the greenback at 109.53 per dollar.

Euro zone inflation data was the main piece of economic data in investors’ sights in Europe.

Inflation accelerated faster than expected in November, likely comforting European Central Bank policymakers - even if some factors pushing up prices may be temporary.

The latest “flash” data showed annual inflation jumped to 1% this month from 0.7% in October, outpacing expectations for 0.9%, as volatile food prices rose more than predicted.

Germany’s benchmark 10-year Bund yield was last at -0.36%, little changed on the day and holding above one-month lows hit the previous day.

French and Dutch yields were also off lows hit this week as investors fretted about U.S.-China trade talks.

Benchmark 10-year notes fell 6/32 in price to yield 1.7878%. Oil prices dipped in muted activity on the because of the U.S. Thanksgiving holiday while OPEC watchers expect an extension to a pact to throttle oil output beyond March but no deeper cuts to be decided by the producer group and its allies.

Brent crude futures were down $1.28 at $62.59 a barrel while West Texas Intermediate (WTI) futures were down $2.22 cents at $55.89.

Reporting by Herbert Lash, additional reporting by Arjun Panchadar in Bengaluru; Editing by Lisa Shumaker

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