Wall Street stocks fell Wednesday as US Treasury bond yields surged to multi-year peaks, while the pound rallied following British inflation data.
The yield on the 10-year US Treasury note rose to 4.26 percent, the highest level since 2008, climbing after publication of Federal Reserve minutes in which policy makers pointed to significant risks that price increases would persist.
“There seems to be a pretty good coalition of folks who think we need to raise again this year,” said Art Hogan of B. Riley Financial.
There is “enough of a reason for investors to take some profits here,” he added.
The broad-based S&P 500 fell 0.8 percent.
Hogan also pointed to other factors behind Wednesday’s weakness, including disappointing China data and seasonal selling patterns in August.
Earlier, European markets closed mixed with Paris down 0.1 percent, London down 0.4 percent but Frankfurt up 0.1 percent.
The British pound strengthened on the release of inflation data showing it had dipped to a 15-month low. Still, the UK has the highest rate of inflation among G7 nations, and the drop might not be enough to prevent another rate hike next month.
“The result will likely elicit only a slight sense of relief in the government and at the Bank of England,” said Richard Flax, Moneyfarm chief investment officer.
– Banks cut China forecasts –
Asian markets were well in the red, with Tokyo, Hong Kong, Seoul and Sydney all closing down more than 1.0 percent.
“Most Asian stocks experienced declines due to further deteriorating economic conditions in China,” said Stephen Innes of SPI Asset Management.
Figures released Wednesday by China’s National Bureau of Statistics showed new home prices declined for a second month in July in a further indication of the problems facing the deeply indebted property sector and the wider economy.
The data comes on top of a raft of weaker-than-expected figures on Tuesday showing slowing growth in retail sales and industrial production.
Several banks slashed their growth forecasts for China, with JPMorgan Chase cutting its estimate for 2023 to 4.8 percent, well below a May forecast of 6.4 percent, Bloomberg reported.
The recent data suggests China may struggle to achieve its official five-percent growth target set for the year.
The economy grew just 0.8 percent between the first and second quarters of 2023, according to official figures.
– Key figures around 2030 GMT –
New York – Dow: DOWN 0.5 percent at 34,765.74 (close)
New York – S&P 500: DOWN 0.8 percent at 4,404.33 (close)
New York – Nasdaq: DOWN 1.2 percent at 13,474.63 (close)
London – FTSE 100: DOWN 0.4 percent at 7,356.88 (close)
Frankfurt – DAX: UP 0.1 percent at 15,789.45 (close)
Paris – CAC 40: DOWN 0.1 percent at 7,260.25 (close)
EURO STOXX 50: DOWN 0.1 percent at 4,284.27 (close)
Hong Kong – Hang Seng Index: DOWN 1.4 percent at 18,329.30 (close)
Shanghai – Composite: DOWN 0.8 percent at 3,150.13 (close)
Tokyo – Nikkei 225: DOWN 1.5 percent at 31,766.82 (close)
Euro/dollar: DOWN at $1.0880 from $1.0905 at 2100 GMT on Tuesday
Pound/dollar: UP at $1.2725 from $1.2705
Euro/pound: DOWN at 85.48 pence from 85.83 pence
Dollar/yen: UP at 146.33 from 145.57 yen
West Texas Intermediate: DOWN 2.0 percent at $79.38 per barrel
Brent North Sea crude: DOWN 1.7 percent at $83.45 per barrel
© Agence France-Presse