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GLOBAL MARKETS-Stocks, dollar, bond yields fall; economic data, Trump tariffs in focus
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GLOBAL MARKETS-Stocks, dollar, bond yields fall; economic data, Trump tariffs in focus
Nov 27, 2024 2:37 PM

*

Japan's yen strengthens to roughly five-week high vs

dollar

*

US PCE data roughly in line with expectations

*

Oil settles near flat with gasoline build, ceasefire in

focus

(Updates following U.S. stock market close)

By Sinéad Carew and Medha Singh

Nov 27 (Reuters) - MSCI's global equities index edged

lower and the dollar slipped with Treasury yields on Wednesday

as investors digested the latest economic data and the potential

impact of policies from the incoming U.S. administration,

including tariff threats.

Oil prices settled close to flat after a large, surprise

build in U.S. gasoline stockpiles and worries about the outlook

for U.S. interest rates in 2025 countered easing supply concerns

from a ceasefire deal between Israel and Hezbollah.

Equities lost some ground after data showed U.S.

consumer spending increased solidly in October, suggesting the

economy kept a strong growth pace but progress dampening

inflation has stalled recently. In the 12 months through October

core inflation, which the Federal Reserve tracks for monetary

policy, increased 2.8% after climbing 2.7% in September.

"This was no earth-shattering news for the markets. We

all expected that inflation would pop up a little bit, but

inflation is not getting out of hand. And that's the key," said

Peter Cardillo, chief market economist at Spartan Capital

Securities. "This paves the way for a 25 basis point cut in

December and then probably a pause."

After the data, traders were betting on a 70% probability

for a Fed rate cut in December compared with a roughly 59%

probability on Tuesday, according to CME Group's FedWatch tool.

On Wall Street, the Dow Jones Industrial Average fell

138.25 points, or 0.31%, to 44,722.06, the S&P 500 fell

22.89 points, or 0.38%, to 5,998.74 and the Nasdaq Composite

fell 115.10 points, or 0.60%, to 19,060.48.

MSCI's gauge of stocks across the globe fell

0.84 points, or 0.10%, to 858.24, while Europe's STOXX 600

index closed down 0.19% earlier in the day.

Investor reactions to the data took into account

President-elect Donald Trump's late Monday threat to immediately

put a 25% tariff on all products from Mexico and Canada when he

takes office in January, and impose an additional 10% tariff on

goods from China. The threat already drew warnings of

retaliation.

"Today's data shouldn't change views of the likely path for

disinflation, however bumpy. But a lot of observers, probably

including some at the Fed, are looking for reasons to get more

hawkish on the outlook given the potential for inflationary

policy change like new tariffs," said David Alcaly, lead

macroeconomic strategist at Lazard Asset Management in an email.

Wednesday's market moves were likely magnified by lower

liquidity before Thursday's U.S. Thanksgiving holiday, according

to Alex Atanasiu, portfolio manager at Glenmede Investment

Management. Thursday's market close will be followed by a

shorter trading day on Friday.

In Treasuries, the yield on benchmark U.S. 10-year notes

fell 5.4 basis points to 4.248%, from 4.302% late on

Tuesday while the 30-year bond yield fell 5 basis

points to 4.4298% from 4.48% late on Tuesday.

The two-year note yield fell 3.1 basis points

to 4.223%, from 4.254% late on Tuesday.

In currencies, the dollar index, which measures the

greenback against a basket of currencies including the yen and

the euro, fell 0.73% to 106.06.

Against the Japanese yen, the dollar weakened 1.3% to

151.11 with the yen touching its strongest level versus the

greenback in five weeks.

The euro was up 0.75% at $1.0565 while sterling

strengthened 0.85% to $1.2675.

After falling on Tuesday, the Mexican peso

strengthened 0.3% versus the dollar, and the Canadian dollar

strengthened 0.21% against the greenback.

The largest cryptocurrency, bitcoin, attempted to

find its feet after a four-day retreat from a record high of

$99,830. It was last up 5.34% at $96,544.00.

Oil prices flitted between red and green having fallen on

Tuesday on confirmation of the Israel-Hezbollah ceasefire after

selling off more sharply on Monday in anticipation of such an

agreement.

U.S. crude settled down 0.07% at $68.72 a barrel,

while Brent ended at $72.83 per barrel, up 0.03% on the

day.

In precious metals, spot gold rose 0.17% to $2,636.35

an ounce. U.S. gold futures rose 0.61% to $2,637.20 an

ounce.

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