*
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.