GLOBAL MARKETS-Equities lose ground with Treasury yields, dollar; US inflation data in focus

Europe's STOXX 600 index fell 0.61% as investors looked ahead to Thursday's European Central Bank policy announcement, with markets expected to monitor President Christine Lagarde comments for hints of a June rate cut. U.S. Treasury yields declined on Tuesday tracking some European bonds as investors waited for inflation data to gauge the future path of interest rates.

A global equity index lost steam in mid-morning after earlier gains on Tuesday while U.S. Treasury yields fell from a more than 4-month high as investors waited for this week's U.S. inflation data and a European Central Bank meeting. Oil prices were down for a second day even as prospects dwindled that negotiations between Israel and Hamas would produce a ceasefire in Gaza.

The dollar was lower as investors waited for U.S. inflation data due on Wednesday and Japan's yen hovered near multi-decade lows, keeping traders on alert for any signs of intervention. "We're seeing Treasury yields come in a bit which has been helpful for sentiment," said Mona Mahajan, senior investment strategist at Edward Jones.

"Ahead of the inflation report there's a rising thought that we know what's coming tomorrow, a slight bump in the headline and a slight decline in the core. If we get that markets would welcome it and we'd see yields stabilize there." On Tuesday at 11:08 a.m. the Dow Jones Industrial Average fell 244.32 points, or 0.63%, to 38,648.48, the S&P 500 lost 26.44 points, or 0.51%, to 5,175.95 and the Nasdaq Composite lost 54.57 points, or 0.34%, to 16,199.38.

MSCI's gauge of stocks across the globe fell 2.17 points, or 0.28%, to 775.87 after earlier rising almost 0.5%. Europe's STOXX 600 index fell 0.61% as investors looked ahead to Thursday's European Central Bank policy announcement, with markets expected to monitor President Christine Lagarde comments for hints of a June rate cut.

U.S. Treasury yields declined on Tuesday tracking some European bonds as investors waited for inflation data to gauge the future path of interest rates. Expectations for U.S. rate cuts have been receding this year on the back of robust economic activity and sticky inflation.

Traders were pricing in a roughly 56% chance for a 25 basis points rate cut in June down from a 61.5% chance a week ago according to CME Group's FedWatch tool. The yield on benchmark U.S. 10-year notes fell 5.4 basis points to 4.37%, from 4.424% late on Monday while the 30-year bond yield fell 4.7 basis points to 4.5062% from 4.553% late on Monday.

The 2-year note yield, which typically moves in step with interest rate expectations, fell 4.2 basis points to 4.7468%, from 4.789% late on Monday. In currencies, the dollar index gained 0.04% at 104.15, with the euro down 0.06% at $1.0852. Against the Japanese yen, the dollar weakened 0.05% at 151.71.

Japanese Finance Minister Shunichi Suzuki said authorities would not rule out any options in dealing with excessive yen moves, repeating his warning that Tokyo is ready to act against the currency's recent sharp declines. In energy, U.S. crude lost 1.03% to $85.54 a barrel and Brent fell to $89.69 per barrel, down 0.76% on the day.

Meanwhile, spot gold hit a record high for the eighth session in a row, supported by central bank buying and heightened geopolitical tensions, according to analysts. Spot gold added 0.31% to $2,346.19 an ounce. U.S. gold futures gained 1.31% to $2,362.20 an ounce.

 

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)