WASHINGTON: Dollar surged to 16-month high on Monday as United States actions declined slightly as investors sought a clearer economic picture.
Persistent concerns that inflation could rise more sharply and stay longer than initially expected weighed on Wall Street as pessimism weighed on actions and oil and pushing up safe havens like the US dollar.
The Dow Jones Industrial Average fell 0.04%, the S&P 500 finished flat and the Nasdaq Composite fell 0.04%.
The MSCI World Stock Index, which tracks stocks from 45 countries, rose 0.08%.
Investors are likely to be watching closely the new US retail sales data on Tuesday, after a report released on Friday showed consumer confidence hit its lowest level in a decade, in part because of the ‘inflation.
“Actions were more or less in a wait-and-see configuration today, and after the market ended last week in the red, it may be looking for direction, ”said Mike Loewengart, chief strategy officer investment at E * TRADE Financial. Being the topic of the day, investors are likely eyeing a retailer update with earnings and retail sales on the bridge to get some insight into the consumer and how they are handling price pressure. “
Rising Treasury yields also helped push stock prices down, with benchmarks hitting three-week highs as companies rushed to debt markets ahead of the holiday period.
20-year bond yields rose 5 basis points to 2.04% while 30-year bond yields rose 5 basis points to 2.01%.
Benchmark 10-year yields gained 4 basis points to 1.62% and are up from a one-month low of 1.42% last Tuesday.
Oil prices stabilized somewhat after hitting a one-week low in previous trading, ending the day in mixed territory. Crude prices had previously been pushed down by speculation that President Joe Biden’s administration could exploit the United States’ strategic oil reserve.
Brent futures stabilized 12 cents, or 0.2%, at $ 82.05 a barrel while U.S. West Texas Intermediate (WTI) crude rose 8 cents, or 0.1%, at $ 80.88.
Investor worries helped push the US dollar to a 16-month high against its major peers on Monday as its safe-haven status proved attractive in these uncertain times.
The dollar index, which measures the currency against six peers, hit 95.510 on Monday, its highest since July 2020, and last rose 0.398% to 95.394.
The surging dollar comes after a surprise report last week showing that rising US inflation weighed on markets, as investors questioned whether the Federal Reserve might be forced to raise rates sooner and whether the US consumer will have to consider higher prices for longer.
“Inflation is being driven by the unusual supply shocks associated with the restart. We expect these imbalances to resolve over the next year, but see inflation as persistent and at a higher level than before. COVID, “Blackrock analysts wrote in a note to investors. . “While the price hikes are widespread, the inflation mix shows the unusual rebound dynamics at play.”
Gold, a safe haven, hit a five-month high earlier in the trading day, but ended up settling a little lower, ending a seven-game winning streak.
Spot gold prices fell 0.10% to $ 1,862.24 an ounce – Reuters