As the dollar pared gains on Wednesday, Wall street sank and European stocks suffered their worst one-day rout in three weeks over the pace of economic recovery. Optimism about reopening economies and accommodative central bank policies have pushed equities to record levels. Concerns are also growing about the impact of rising coronavirus infections due to the Delta variant.
The Dow Jones Industrial Average fell 0.2% to end at 35,029.19 points and S&P 500 lost 0.13% with materials, energy and technology sectors. The Nasdaq Composite dropped to 0.57% to 15,286.68. Data from last week is also assessed by markets which shows that the U.S economy created the fewest jobs in seven months in August. It is wondered that how U.S central bank will respond to it.
In Europe, markets focused on whether the European Central Bank will scale back its bond purchase program this week or not. The jumping of the dollar in one week also paired some gains against a basket of other major currencies. The dollar also hit a one-week peak against the single currency with trading at $1.1826.
The 10-year Bund yield of Germany also hit the eight-week highs before it edge lower to -0.32%. U.S government bond yields fell on Wednesday and touched a low session after a strong auction. It happened by the Treasury of 10-year notes and the Fed’s Beige Book of economic activity.
MSCI’s broadest index of Asia-Pacific fell 0.71% outside Japan which stem an eight-session string of gains. The previous day rout of Bitcoin extended down to 1.6%. Coinbase Global Inc received a legal notice from top U.S markets regulators as their shares dropped over 3%. After Hurricane Ida hit the region of the Gulf of Mexico, Brent settled up to 1.3% at $72.60 per barrel. U.S West Texas Intermediate (WTI) crude settled up to 1.4% at $69.30 per barrel with the prices supported by a slow restart to production.
Deutsche Bank analysts said in a note yesterday that there are fears that central banks might start to taper their asset purchases. It is expected to see the start of the process not least with inflation particularly given tomorrow’s ECB decisions.