Gold, one of the year’s best-performing trades, slid as investors booked profits. It remains on course for its strongest year since the 1979 oil crisis and is up more than 50% so far this year. Spot gold was last down 0.53% at US$4,102.09 an ounce.
Wall Street’s three major indexes ended lower, with shares of Netflix falling 10.1% and weighing on the market. Tesla, the first of the Magnificent Seven group of megacap stocks to report this US earnings season, ended the session down 0.8% ahead of its quarterly report. They were slightly lower in extended trading following the company’s results.
Investors also digested developments on the trade front. Reuters reported, citing a US official and three people briefed by US authorities, that the Trump administration is considering a plan to curb a dizzying array of software-powered exports to China, from laptops to jet engines, to retaliate against Beijing’s latest round of rare earth export restrictions.
“It looks like we’re letting a little air out of the balloon,” said Oliver Pursche, senior vice president at Wealthspire Advisors in Westport, Connecticut.
“Given the sharp rally and gains that we’ve made year to date, and in particular since the beginning of April, combined with the concerns over future economic growth and the absence of data due to the government shutdown, there’s no reason to make material moves in either direction,” but maybe “you’re going to take some profits; you’re going to do some rebalancing,” he said.
Wednesday marked the 22nd consecutive day for the US federal government shutdown.
The Dow Jones Industrial Average fell 334.33 points, or 0.71%, to 46,590.41, the S&P 500 fell 35.95 points, or 0.53%, to 6,699.40 and the Nasdaq Composite fell 213.27 points, or 0.93%, to 22,740.40.
MSCI’s gauge of stocks across the globe fell 4.16 points, or 0.42%, to 990.69.
The pan-European STOXX 600 index fell 0.18%. However, London stocks rose for a third consecutive day as investors increased bets on interest rate cuts from the Bank of England after data showed inflation unexpectedly held steady.
The blue-chip FTSE 100 gained 0.9%. Sterling fell by as much as 0.5% against the dollar. It was last down 0.13%.
US Treasury yields slid for a third straight session, though the market was range-bound as the US federal government dragged on with no resolution in sight.
US yields further extended their fall in afternoon trading after a decent US$13-billion auction of 20-year bonds. In afternoon trading, the benchmark 10-year yield was down 1.4 basis points (bps) at 3.949%.
The Federal Reserve is expected to reduce rates two more times this year, with a quarter-percentage-point cut baked in for the Oct 28-29 meeting, according to LSEG calculations using rate futures.
The dearth of US economic data due to the ongoing shutdown means that policymakers could be left flying blind at the meeting, a less-than-ideal situation as they remain divided over which risks deserve the most attention.
The yen was nearly flat against the dollar. Japan’s new finance minister Satsuki Katayama said on Wednesday that it is necessary for the government and the Bank of Japan to coordinate to make economic and monetary policies effective.The BOJ is scheduled to announce its next policy decision on Oct 30.
On Tuesday, sources told Reuters that the new prime minister, Sanae Takaichi, is preparing an economic stimulus package likely to exceed last year’s 13.9 trillion yen (US$92.19 billion) to help households tackle inflation.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,fell 0.05% to 98.93, with the euro up 0.06% at US$1.1605. Against the Japanese yen, the dollar strengthened 0.04% to 151.99.
Oil prices ended higher. US crude rose US$1.26 to settle at US$58.50 a barrel and Brent gained US$1.27 to settle at US$62.59.