Stock markets and oil prices retreat

The Fearless Girl statue, with a flower draped on the shoulder, stands outside the New York Stock Exchange on Oct. 23, 2024. (AP Photo/Peter Morgan)

New York, United States — European and US stock markets moved lower Wednesday as investors focused on company earnings, bond yields and the outlook for the US and Chinese economies.

The dollar rose against major rival currencies while oil prices retreated.

“Rising Treasury yields continue to be a major topic of conversation mainly because the market isn’t entirely clear about why they are going up like they are,” said market analyst Patrick O’Hare at Briefing.com.

READ: Oil prices rise as US stocks move sideways

The yield on 10-year US government bonds has risen to 4.24 percent from 3.73 percent one month ago.

“A more market-friendly explanation suggests they are a byproduct of an improved growth outlook that bodes well for earnings,” said O’Hare.

“A less market-friendly explanation is that rising Treasury yields reflect burgeoning concerns about the budget deficit and inflation heating up again,” he added.

“The economic reports are such that people are losing faith in the idea that we’re going to get aggressive rate cuts,” said Steve Sosnick of Interactive Brokers.

With the US economy in rude health, bets on another bumper cut to interest rates at the Federal Reserve’s next meeting have dwindled, supporting the dollar.

“Another key factor has been the Trump Trade,” said Daniela Sabin Hathorn, senior market analyst at Capital.com.

Trump Trade

The Trump Trade describes investors acting in expectation of the economic and political policies of a potential second Donald Trump administration in the United States.

“Betting odds now show a 60-38 advantage for Donald Trump and markets are clearly agreeing with this with yields and the dollar pushing higher as traders expect a rise in public spending and inflation if he is elected,” said Sabin Hathorn.

Analysts argue that a Trump win could see a renewed rise in inflation as the former president favors tax cuts.

Investors were also keeping tabs on corporate earnings reports.

Shares in Boeing dropped 1.8 percent after the aerospace giant reported a major $6.2 billion quarterly loss.

A six-week labor strike has weighed on its commercial plane division, while costly problems bogged down its defense and space business.

About 33,000 IAM workers in the US Pacific Northwest walked off the job on September 13. The union is slated to vote on a new contract that could end the stoppage later Wednesday.

Electric vehicle company Tesla reported higher profits after the closing bell, sending its shares 8.1 percent up in after-hours trading.

Away from company results, shares in Tokyo Metro rocketed 45 percent in Japan’s biggest initial public offering for six years.

READ: Tokyo Metro shares rocket higher on debut

Shares in McDonald’s, meanwhile, sank more than five percent as investors reacted to news that one person died and dozens became sick following a severe E. coli outbreak linked to its Quarter Pounder hamburgers.

Gold struck yet another record high with the precious metal profiting from its haven status as markets struggle to nail down a winner in the upcoming US presidential election and fears of an escalating crisis in the Middle East.

Crude futures slid more than one percent having shot higher Tuesday on an indicator pointing to increased demand in China, which is taking measures to stimulate its flagging economy.

Key figures around 2030 GMT

New York – Dow: DOWN 1.0 percent at 42,514.95 points (close)

New York – S&P 500: DOWN 0.9 percent at 5,797.42 (close)

New York – Nasdaq Composite: DOWN 1.6 percent at 18,276.65 (close)

London – FTSE 100: DOWN 0.6 percent at 8,258.64 (close)

Paris – CAC 40: DOWN 0.5 percent at 7,497.48 (close)

Frankfurt – DAX: DOWN 0.2 percent at 19,377.62 (close)

Tokyo – Nikkei 225: DOWN 0.8 percent at 38,104.86 (close)

Hong Kong – Hang Seng Index: UP 1.3 percent at 20,760.15 (close)

Shanghai – Composite: UP 0.5 percent at 3,302.80 (close)

Euro/dollar: DOWN at $1.0787 from $1.0800 on Tuesday

Pound/dollar: DOWN at $1.2929 from $1.2977

Dollar/yen: UP at 152.65 yen from 151.02 yen

Euro/pound: UP at 83.41 pence from 83.14 pence

West Texas Intermediate: DOWN 1.9 percent at $70.78 per barrel

Brent North Sea Crude: DOWN 1.4 percent at $74.99 per barrel