Dollar elated by yield surge, Asia stocks downcast

Lloyd Doyle
October 8, 2018

In oil, crude futures steadied on Friday after climbling to four-year highs earlier this week, and both benchmarks marked weekly gains ahead of US sanctions on Iranian oil exports. That was another sign economic growth is likely to continue.

Bloomberg also reported yesterday that index provider FTSE Russell has introduced an index to track syariah-compliant companies on the Singapore Exchange, giving global investors more options in the city's equity market.

Early in the session, the Dow Jones Industrial Average index shed 108 points to 26,719, held back by Procter & Gamble, an interest-rate sensitive stock, as well as Nike, Home Depot, Cisco Systems and Visa.

The U.S. bond market will be closed on Monday for the Columbus Day holiday though stock markets are open.

As a result, a Fed hike in December is now put at an 8 in 10 chance, while investors lifted expectations for how high rates may eventually go.

That boosted bank stocks, which jumped 1.6%, outstripping the 1.3% rise in the financial sector, which was the only gainer among the 11 major S&P sectors.

The CBOE Global Markets volatility index.VIX, known as Wall Street's "fear gauge", rose 4.12 points, its highest surge since August 15.

The Nasdaq fell close to 150 points, dragged down by Tesla Inc (NASDAQ:TSLA) after GM raced past the electric vehicle maker in an automated driving test conducted by Consumer Reports.

The S&P/TSX composite index was down 75.42 points at 15,996.63.

Yields across the curve all saw significant spikes with the 10-year rates jumping above 3.2% for the first time since May 2011, while the longer term 30-year yields traded at the highest level since 2014 reaching 3.37% at the time of writing.

President Trump has previously expressed his dismay at China's alleged "theft" of data from U.S. tech companies, and today's report is likely to add fuel to the fire. Stocks began the day higher after the employment data added to confidence in the strength of the American economy.

OVERSEAS: Germany's DAX lost 0.8 percent and so did the CAC 40 in France.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3%, while Japan's Nikkei dropped 0.5% and the Australian benchmark was up just 0.1%. Intel lost 1.1 percent to $47.63 and Netflix lost 2.78 percent to $353.62.

Italian bond yields had initially bucked this trend and fallen after the government moderated contentious spending plans, but this changed as the session wore on as a report suggested the European Union was poised to reject Rome's budget plans.

The Japanese yen strengthened 0.11 per cent versus the greenback at 113.81 per dollar, while Sterling was last trading at $1.3104, up 0.66 per cent on the day.

Copper fell 0.3 percent to $2.78 a pound, the lowest in more than two weeks.

Gold rose 0.3 percent to $1,205.60 an ounce.

Emerging currencies including the rupee bore the brunt during the day as investors shifted funds from riskier assets to safe bets like the United States dollar.

West Texas Intermediate (WTI) crude futures fell 93 cents to $75.48 a barrel, a 1.2 percent loss. The euro rose to $1.1525 from $1.1515.

Other reports by Iphone Fresh

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