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Stock market today: Global shares decline as higher Treasury yields weigh on stocks

B360 May 29, 2024, 4:55 pm
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TOKYO: Shares retreated on Wednesday in Europe and Asia as a rise in bond yields added to pressure on stocks.

France's CAC 40 slipped 0.7% in early trading to 8,001.58, while Germany's DAX declined 0.4% to 18,596.23. Britain's FTSE 100 edged nearly 0.2% lower, to 8,240.60.

The future for the S&P 500 was down 0.6% while that for the Dow Jones Industrial Average slipped 0.5%.

In Asian trading, Japan's benchmark Nikkei 225 shed 0.8% to 38,556.87. Australia's S&P/ASX 200 dipped 1.3% to 7,665.60. South Korea's Kospi lost 1.7% to 2,677.30. Hong Kong's Hang Seng slipped 1.8% to 18,477.01, while the Shanghai Composite was little changed, edging up less than 0.1% to 3,111.02.

The International Monetary Fund raised its forecast for China's economic outlook, saying it expects the No. 2 economy to grow at a 5% annual pace this year. But it also warned that consumer-friendly reforms are needed to sustain strong, high-quality growth.

Strong spending by US consumers has been one of the main reasons the economy has managed to defy predictions of a recession, at least so far, but some cracks have begun to show. Lower-income households in particular have begun to buckle under the pressure of still-high inflation.

The Fed has been holding the federal funds rate at the highest level in more than two decades in hopes of grinding down on the economy and investment prices enough to get high inflation fully under control. If it leaves rates too high for too long, it could kneecap the job market and overall economy. But a premature cut to interest rates could allow inflation to reaccelerate and inflict even more pain on US households.

A rise in bond yields has weighed on share prices. Higher yields can make payments for everything from mortgages to credit cards more expensive, and they tend to put downward pressure on the economy.

On Tuesday, the S&P 500 closed little changed, just below its record set a week ago. The Dow Jones Industrial Average fell 0.6%, while gains in technology stocks pushed the Nasdaq composite up 0.6% to another all-time high.

This week has several reports that could sway the Fed's thinking, beyond Tuesday's on confidence among consumers.

The highlight likely arrives on Friday when the government releases its latest monthly report on spending by households and the incomes that they earned. It will also include the measure of inflation for April that the Federal Reserve prefers to use.

In other trading, benchmark US crude rose 72 cents to $80.55 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, added 74 cents to $84.96 a barrel.

In currency trading, the US dollar was unchanged at 157.12 Japanese yen. The euro cost $1.0839, down from $1.0857.


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MAY 2024

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