By Sinéad Carew and Tom Wilson
LONDON (Reuters) -MSCI’s global equities gauge was lower on Wednesday and safe haven assets such as Treasuries and Japan’s yen were in demand after a mixed batch of economic data, while Wall Street’s stock trading was choppy after Tuesday’s big sell-off.
In energy markets, crude oil futures were falling for a third day in a row but at a slower pace than Tuesday when both U.S. crude and Brent both dropped more than 4%.
In U.S. Treasuries yields were lower but the closely watched yield curve between two-year and 10-year Treasury note yields briefly turned positive on Wednesday, which could be a bearish indicator for the U.S. economy.
Wall Street indexes had closed sharply lower on Tuesday – registering their biggest drop since early August – as investors took profits in growth stocks and reacted to weaker than expected U.S. manufacturing data. Another big factor was a dive in shares of U.S. heavyweight Nvidia whose value sank by a record $279 billion on Tuesday as investors checked their enthusiasm for artificial intelligence (AI) stocks.
“Sell-offs that come without significant news and are more profit-taking oriented often peter out quickly and find stability at a lower level. That’s what we’re seeing today,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
“It was a brief rush to the exits, which we’ve seen before particularly in a market that’s risen like this. Once that occurs and there’s some shake out it seems to find its level again and start to recover.”
And Meckler noted that investors have become used to mixed economic data. “You could point to numbers that show a softening and numbers that show a soft landing,” he said.
This held true for Wednesday’s releases and commentary from the Federal Reserve as investors tried to assess whether the U.S. central bank will cut rates by a quarter percentage point or a half a percentage point this month.
Wednesday’s Commerce Department data showed that new orders for U.S.-manufactured goods increased more than expected in July, boosted by defense aircraft, but demand elsewhere was moderate with borrowing costs high.
U.S. job openings dropped to a 3-1/2-year low in July, suggesting the labor market was losing steam, leading traders to add to bets that the Fed will deliver a half-a-percentage-point reduction in interest rates at its next meeting this month.
Also on Wednesday, Atlanta Federal Reserve President Raphael Bostic said the U.S. central bank must not keep interest rates too high much longer or it risks harming employment too much.
On Wall Street at 11:31 a.m. the Dow Jones Industrial Average rose 49.43 points, or 0.12%, to 40,985.61, the S&P 500 lost 2.59 points, or 0.05%, to 5,526.06 and the Nasdaq Composite lost 18.75 points, or 0.11%, to 17,116.87.
MSCI’s gauge of stocks across the globe fell 3.94 points, or 0.48%, to 815.53 while Europe’s STOXX 600 index fell 1.03%.
In foreign exchange markets, the dollar eased against most major currencies after the July U.S. job openings data tilted the odds further in favor of larger U.S. rate cuts while the yen benefited from a safe haven bid.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.32% at 101.37.
The euro was up 0.33% at $1.1079 while against the Japanese yen, the dollar weakened 0.82% to 144.26.
In Treasuries, the yield on benchmark U.S. 10-year notes fell 5.1 basis points to 3.793%, from 3.844% late on Tuesday while the 30-year bond yield fell 4 basis points to 4.0898% from 4.13% late on Tuesday.
The 2-year note yield, which typically moves in step with interest rate expectations, fell 9.1 basis points to 3.7971%, from 3.888% late on Tuesday.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a negative 0.6 basis points.
Crude oil prices fell on pessimism about demand in the coming months as crude producers offered mixed signals about supply increases.
Concerns over the sluggish outlook in China – the world’s biggest oil importer – and the possibility of a global slowdown that would mean reduced fuel demand, have exacerbated the decline in oil prices.
U.S. crude lost 0.68% to $69.83 a barrel and Brent fell to $73.27 per barrel, down 0.62% on the day.
Gold prices rose slightly after slipping to their lowest level in nearly two weeks after three sessions of losses.
Spot gold added 0.08% to $2,494.69 an ounce. U.S. gold futures fell 0.26% to $2,483.50 an ounce.
(Reporting by Sinéad Carew in New York, Tom Wilson, Dhara Rhanasinghe in London; Rae Wee in Singapore and Tom Westbrook in Sydney; Editing by Sam Holmes, Barbara Lewis, Mark Potter, William Maclean)
