Risk appetite fades, stocks snap seven-day winning streak

by Margaryta Kirakosian

Global stocks snapped a seven-day winning streak and oil prices slumped as investors pulled away from risky assets with the enthusiasm over the recent equity rally continuing to dim. 

The MSCI World Index dipped 0.1% and S&P 500 equity futures slid 0.5%. Crude prices fell after President Donald Trump said the US is getting closer to a deal on Iran’s nuclear program, with Brent sinking to $64 a barrel. Both the dollar and gold declined. 

Traders are looking ahead to a speech by Federal Reserve Chair Jerome Powell and slew of economic reports as the next indication about whether the lightning-quick equities rebound has further to run. Billionaire Steve Cohen, speaking Wednesday at the Sohn Investment Conference in New York, put the chances of a US recession at about 45%.

Cohen, the founder of hedge fund Point72 Asset Management, said he doesn’t expect the Federal Reserve to cut rates right away, because “they are going to be worried about inflation from tariffs.” He said he expects US economic growth next year to slow to 1.5% or less, “which is OK but not phenomenal.”

US data on Thursday include retail sales and producer prices for April as well as a manufacturing reading. Powell is due to deliver opening remarks at a Fed conference in Washington.

The yield on 10-year Treasuries held near the highest in a month at 4.53%. 

In corporate news, Starbucks Corp. has contacted private equity firms, technology companies and others as it considers options for its China business, including a possible stake sale, according to people familiar with the matter.

In Europe, stocks were dragged down by the retreat in energy prices, with the Stoxx 600 Index losing 0.4%. Increased oil flows from Iran would add to a potential glut in energy supply. 

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.4% as of 8:59 a.m. London time
• S&P 500 futures fell 0.5%
• Nasdaq 100 futures fell 0.6%
• Futures on the Dow Jones Industrial Average fell 0.6%
• The MSCI Asia Pacific Index fell 0.3%
• The MSCI Emerging Markets Index fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.2% to $1.1198
• The Japanese yen rose 0.6% to 145.88 per dollar
• The offshore yuan was little changed at 7.2095 per dollar
• The British pound was little changed at $1.3268

Cryptocurrencies

• Bitcoin fell 1.7% to $101,806.7
• Ether fell 2.6% to $2,532.24

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.51%
• Germany’s 10-year yield declined two basis points to 2.68%
• Britain’s 10-year yield was little changed at 4.71%

Commodities

• Brent crude fell 2.5% to $64.21 a barrel
• Spot gold fell 1.1% to $3,142.39 an ounce

This story was produced with the assistance of Bloomberg Automation.

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