NEW YORK (Reuters) – Global markets dipped on Thursday and U.S. stocks were lower as oil prices retreated and concerns about a possible slowdown in the economic recovery from COVID-19 weighed.
Wall Street indexes fell as losses in heavyweight technology and oil stocks offset strong retail sales data.
A report from the U.S. Commerce Department showed retail sales unexpectedly rose in August, indicating positive trends in consumer spending, a key factor in America’s economic recovery.
However, the U.S. labor market remains under pressure, with data showing initial jobless claims were slightly more than expected last week.
Oil slipped below $75 a barrel on Thursday, falling from a multi-week high a day earlier, as the threat to U.S. Gulf production from Hurricane Nicholas receded. [O/R]
European equities gained, bucking the trend from a weak Asian session. Hong Kong’s Hang Seng index dropped to its lowest level so far this year, and Chinese shares sank as investors dumped property and consumer stocks over fears that the liquidity crisis at China’s Evergrande Group could affect the broader economy.
At 1448 GMT, the MSCI world equity index was down by around 0.49%, down from its an all-time high on Sept. 7.
Unexpectedly weak data from China on Wednesday reinforced investor bets that global growth is slowing due to COVID-19 and supply chain constraints.
But Europe’s STOXX 600 was up 0.5% on the day.
The Dow Jones Industrial Average fell 160.36 points, or 0.46%, to 34,654.03, the S&P 500 lost 26.34 points, or 0.59%, to 4,454.36 and the Nasdaq Composite dropped 92.52 points, or 0.61%, to 15,069.01.
“(Retail spending) categories that were strongest in August were in Covid-beneficiary categories,” wrote Ellen Zentner, chief U.S. economist at Morgan Stanley.
“Now incorporating today’s retail sales release, we lift our real (personal consumer expenditures) tracking to +1.9% and GDP to +5.0%.”
Markets remain focused next week’s Federal Reserve meeting for clues as to when the U.S. central bank will start to taper stimulus, especially after the flurry of U.S. economic data out this week.
On Tuesday, data from the U.S. Commerce Department showed inflation cooling and having possibly peaked, but inflation in Britain was the highest in years, according to data on Wednesday.
“We have an unusual situation where the overall market is sideways to lower but with a risk-on trend underneath and that’s down to signs the Delta variant may be peaking in the U.S., which is driving people into reflation and recovery plays,” said Kiran Ganesh, head of cross asset at UBS Global Wealth Management.
“At the same time there are concerns about fiscal consolidation and worries about China moving to lockdowns.”
Major banks have told clients to reduce their exposure to stocks, with many market participants expecting the equity bull run to end.
U.S. crude recently fell 1.2% to $71.74 per barrel and Brent was at $74.69, down 1.02% on the day.
The dollar index rose 0.523%, with the euro down 0.52% to $1.1753.
The Australian dollar – which is seen as a liquid proxy for risk appetite – was 0.2% weaker at $0.7318.
Jobs data showed that Australian employment dived in August as coronavirus lockdowns in Sydney and Melbourne forced businesses to lay off workers and slash hours.
The U.S. 10-year Treasury yield was 1.3344%, while core euro zone government bond yields were little changed.
Reporting by Elizabeth Dilts Marshall; editing by David Evans