Dollar rises despite drop in yields; data, lockdowns weigh on stocks

By Rodrigo Campos NEW YORK (Reuters) - Stocks and oil prices fell on Friday pressured by intensifying lockdowns and weak U.S. retail sales data, while the dollar was on track to post its strongest week in over two months

Reuters January 16, 2021 00:08:33 IST
Dollar rises despite drop in yields; data, lockdowns weigh on stocks

Dollar rises despite drop in yields data lockdowns weigh on stocks

By Rodrigo Campos

NEW YORK (Reuters) - Stocks and oil prices fell on Friday pressured by intensifying lockdowns and weak U.S. retail sales data, while the dollar was on track to post its strongest week in over two months.

U.S. bond yields and stocks had risen recently partly on the back of expectations of the rollout of coronavirus vaccines and on a massive stimulus plan by the incoming Democratic administration. President-elect Joe Biden on Thursday unveiled a $1.9 trillion fiscal plan.

But vaccinations have been slower to administer than expected and the prospect of stricter lockdowns in France and Germany, as well as a resurgence of COVID-19 cases in China, weighed on market sentiment.

"I feel that after all the optimism regarding vaccines, we are now living the reality of a very slow rollout, which is weighing heavily on business activity," said Juan Perez, senior currency trader at Tempus Inc in Washington.

"Until we have more guarantees on the medical front, markets will not continue to flourish despite whatever financial aid may be on the way," Perez said.

The dollar gained alongside Treasury yields against the euro and Sterling, while the yen was little changed.

Stocks fell but remained close to recent record highs, with investors also digesting the prospect of rising taxes to pay for the plan.

"Spending is easy to do but the question is how are you going to pay for it? Markets often ignore politics but they don't often ignore taxes," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

The Dow Jones Industrial Average fell 113.15 points, or 0.37%, to 30,878.37, the S&P 500 lost 20.37 points, or 0.54%, to 3,775.17 and the Nasdaq Composite dropped 75.21 points, or 0.57%, to 13,037.43.

The pan-European STOXX 600 index lost 1.01% and MSCI's gauge of stocks across the globe shed 0.74%.

Emerging market stocks lost 0.92%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.67% lower, while Japan's Nikkei lost 0.62%.

Yields were also pressured lower by a weaker than expected reading in U.S. retail sales.

"This morning’s disappointing retail sales figures reinforced the idea that more stimulus will be needed," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.

U.S. 10-year notes last rose 11/32 in price to yield 1.092%, from 1.129% late on Thursday. Despite the weekly decline in the benchmark yield, it was set to close a second week above 1%, a streak not seen since before the lockdowns took hold.

Italian benchmark yields were set to post their largest weekly advance since October. Prime Minister Giuseppe Conte resisted calls to resign on Thursday after a junior coalition party led by former premier Matteo Renzi pulled out of the government on Wednesday and stripped it of its majority.

Oil prices fell sharply on concerns that demand would be lower as COVID-19 continues to rage globally.

"The recent resurgence in coronavirus infections, appearance of new variants, delayed vaccine rollouts and renewed lockdown measures in most major OECD economies has clouded the economic and demand recovery," said Stephen Brennock of oil broker PVM.

U.S. crude recently fell 2.63% to $52.16 per barrel and Brent was at $54.94, down 2.62% on the day.

The dollar index rose 0.458%, with the euro down 0.55% to $1.2089, while Sterling was last trading at $1.3594, down 0.68% on the day.

The Japanese yen weakened 0.03% versus the greenback at 103.83 per dollar.

Spot gold dropped 0.9% to $1,829.65 an ounce. Silver fell 3.14% to $24.73.

Bitcoin last fell 8.75% to $35,710.80.

(Reporting by Rodrigo Campos; Additional reporting by Devik Jain and Medha Singh in Bengaluru, Lucia Mutikani in Washington, and Karen Brettell and Saqib Iqbal Ahmed in New York; Editing by Nick Zieminski)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.