Stocks, oil and yields on government bonds all fell on Monday, reversing some of their recent gains as investors began the week in a cautious mood, still grappling with the possibility that US interest rates could soon be raised.
The FTSEuroFirst 300 index of leading shares, Germany’s DAX and France’s CAC 40 all shed around 0.8%, and Britain’s FTSE was down a third of a percent, Reuters reported.
Shares in German drugs and chemicals group Bayer AG were among the most notable decliners, down more than 3% after it unveiled a $62 billion bid for US seeds company Monsanto Co.
Investors also took in economic data that showed euro zone private sector growth in manufacturing and services slowing down a little in May, even though Germany continued to power ahead.
US futures pointed to a fall of around 0.2% at the open on Wall Street, as investors continued to digest last week’s surge in US rate hike expectations.
Purchasing managers index data showed that eurozone business growth slipped in May to a 16-month low, the latest evidence to suggest a strong acceleration in growth in the first
Earlier in Asia shares mostly rose, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.3%, but Japan’s Nikkei ended down 0.5%.
The Markit/Nikkei flash Japan manufacturing PMI showed Japanese manufacturing activity contracted at the fastest pace in more than three years in May, while a slump in Japanese trade and reports that Japan’s sales tax increase would indeed be implemented all weighed on the Nikkei.
The 10-year US Treasury yield fell 3 basis points to 1.82%, after having chalked up its biggest weekly rise last week for six months. The two-year yield fell a basis point, flattening the yield curve slightly.
Lower US yields and a flatter curve kept a lid on the dollar. The dollar index, which tracks the greenback against a basket of six rival currencies, slipped marginally to 95.31. It has racked up three straight weekly gains, a run not seen since the first quarter of last year.
The yen gained most among the major currencies, supported by the ballooning Japanese trade surplus. The dollar was last down 0.7% at 109.37 yen, and the euro was steady at $1.12.
Crude oil prices fell by about 1%, once again running out of steam as the $50 a barrel level came into view. It took three months for oil to make the convincing and lasting break below $50 on the way down last year, and it’s shaping up to be a psychological barrier on the way back up.
Both US and Brent crude were hovering around $48 a barrel.
