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Dubai - US stocks retreated from records as energy producers retreated after crude slid to a seven-month low. The dollar rose as the stream of Fed speakers continued, while the pound sank after Britain’s central bank governor underlined his dovish outlook.
Oil and gas companies fell more than 1% to lead the S&P 500 Index lower. Technology-heavy equity benchmarks also retreated after rallying Monday. European stocks gave up advances as a slump in commodities including oil and copper dragged down miners. Oil retreated as the prospect of a reduction in US inventories was offset by rising Libyan production.
The UK currency weakened a second day as Bank of England Governor Mark Carney said he is still worried about the impact of Brexit on the economy. Hong Kong shares retreated ahead of MSCI’s decision on whether to include China’s domestic equities in its main indices.
Governor Carney’s first major speech since May comes a day after negotiations over Britain’s exit from the European Union formally began, and his comments addressing weakness in the UK economy and subdued inflation join a raft of talking points for investors this week.
MSCI’s announcement is due in a matter of hours, while the latest in a string of appearances from US central bank officials saw Federal Reserve Vice Chairman Stanley Fischer speaking in Amsterdam.
Treasuries fell Monday after Fed Bank of New York President William Dudley said halting the tightening cycle now would imperil the economy. His comments were followed by remarks from Chicago Fed President Charles Evans, who said “the current environment supports very gradual rate hikes and slow preset reductions in our balance sheet.”
Here are some of the key upcoming events:
Still to come on the Fed speaker list: Eric Rosengren, Robert Kaplan, Jerome Powell, James Bullard and Loretta Mester. MSCI announces whether it approved Chinese-listed stocks in its global benchmarks.
The $6.8trn onshore market is the world’s second largest and accounts for 9% of global stock value, but has been rejected for index inclusion three times by MSCI over issues including capital controls and long trading halts. MSCI’s decision is expected on Tuesday after the close of US markets.
Here are the main moves in markets:
Stocks
The Stoxx Europe 600 erased a gain to trade 0.2% lower at 15:33. Energy stocks slumped 1.9% and miners lost 2.1%. he UK’s FTSE 100 Index dropped 0.2%. The S&P 500 Index fell 0.2%.
Currencies
The British pound fell 0.7% to $1.2654, erasing an earlier gain. The euro was little changed at $1.1153. The Bloomberg Dollar Spot Index rose 0.1% after advancing 0.4% on Monday. The measure touched the lowest level since October last week. The yen was little changed at 111.50 per dollar. The currency retreated 0.6% on Monday.
Bonds
The yield on 10-year Treasuries fell one basis point to 2.18%, after rising four basis points on Monday. Benchmark yields in the UK fell two basis points.
Commodities
West Texas oil erased a gain to slump 2.4% to $43.15 a barrel. Gold rose 0.1% to $1 244.97 an ounce, after closing Monday at the lowest in more than a month.
Asia
Japan’s Topix rose 0.7% to the highest since August 2015 amid weakness in the yen. Hong Kong equities retreated ahead of MSCI’s decision on whether to include China’s domestic equities in benchmark indices.
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