World stocks retracted from record highs on Wednesday, January 17, set for only their second day of losses in 2018 as lower commodity prices and a string of downbeat updates from companies dampened the mood in global markets.
European bourses opened lower, mirroring moves in Asia and Wall Street overnight, as earnings updates from companies weighed.
Luxury fashion brand Burberry (BRBY.L) and educational publishing company Pearson (PSON.L) were among the top fallers after disappointing trading updates.
Their losses, along with weakness in the heavyweight financial and healthcare sectors, dragged the pan-European STOXX 600 and Britain’s FTSE down as much as 0.2 percent.
Asian equities stepped back from a record high as the region’s resource shares were knocked by falling oil and commodity prices.
The losses across regions weighed on the MSCI world equity index, pulling it lower 0.1 percent and setting it up for only its second decline from the start of the year.
World shares have rallied in 2018 on prospects of continued strong global growth and improving earnings in the United states and elsewhere, with many analysts expecting an extension of the bull run in equities.
Earlier overnight, Wall Street paused its rally, hit by a 1.2 percent fall in energy stocks .SPNY as well as weakness in General Electric (GE.N). Futures indicated a positive open on Wednesday, however. .ESc1
“There wasn’t any immediate catalyst for yesterday’s sharp sell down apart from some weakness in commodity markets, but U.S. markets’ inability to hold onto these sorts of gains might suggest that we could be due some sort of pullback, after the strong start to this year,” said Michael Hewson, chief market analyst at CMC Markets in London.
The Cboe volatility index .VIX, which measures investors’ expectation on price swings in U.S. shares, rose to a one-month closing high of 11.66 from near record low levels seen earlier this month.
The 2-year U.S. Treasury yield hit its highest level since late 2008, at 2.0390 percent. US2YT=RR
