World shares chalked up their longest losing streak in well over a year on Thursday, March 9 as bets on rising U.S. interest rates propelled the dollar and benchmark bond yields higher and beaten-up commodity markets struggled to find a footing.
With global energy stocks on the run, MSCI’s 46-country All World index fell for a sixth consecutive day, the longest slide since the start of 2016 and down from an all-time high set just weeks ago.
Europe’s main markets also started in red though the euro (EUR=EBS) was one of the few currencies to make headway against the dollar as focus turned to how the European Central Bank will respond to signs of a pick up in the euro zone economy. ECB policymakers meet later.
“There is only one game in town for this meeting and that’s whether Draghi will signal that some form of removal of accommodation is on the cards,” said Aberdeen Asset Management investment manager Patrick O’Donnell.
“He is going to have to acknowledge the better activity data of late. But stubbornly low core inflation probably gives him a get out card.”Economic data out of China continued to surprise, with consumer inflation coming in well under expectations at an annual 0.8 percent, largely due to falling food prices, Reuters reports.
Producer prices still rose at the fastest pace since 2008, keeping alive hopes that China had stopped exporting disinflation to the rest of the world.
That inflationary pulse was timely given oil prices dived 5 percent on Wednesday to their lowest this year as U.S. crude inventories ballooned to a record high. [O/R]
The market did pare some losses on Thursday, with U.S. crude (CLc1) up 30 cents at $50.58 and Brent crude (LCOc1) bouncing 43 cents to $53.54 a barrel.
Wall Street had been side-swiped by the retreat in oil, with energy stocks (.SPNY) losing 2.5 percent in their worst performance since mid-September.
The Dow (.DJI) fell 0.33 percent, while the S&P 500 (.SPX) lost 0.23 percent and the Nasdaq (.IXIC) added 0.06 percent.
Interest rate-sensitive real estate stocks (.SPLRCR) also took a hit after the ADP employment report showed private payrolls surged by 298,000 last month, far above expectations.
