- Dollar racks up worst quarter in seven years
- Oil up for seventh session but worst first half since 1998
- Nike lifts Dow, S&P; tech stocks weigh on Nasdaq
- European shares set for biggest monthly loss in a year
- U.S. yields rise; inflation decline unlikely to delay rate hikes
Bond yields in the United States and Europe were poised for big weekly gains on Friday, weighing on major equity markets, while oil prices extended their rebound into a seventh session but were still set to post their worst first half since 1998.
The dollar was headed for its worst quarter in seven years against a basket of currencies.
Expectations for stronger economic data in Europe and rate tightening at central banks around the globe has knocked the greenback from its perch, pushing it 4.7 percent lower for the April-June quarter, the worst performance since the third quarter of 2010.
Against the euro, the dollar has sunk more than 7 percent for the quarter and is on pace to drop more than 2 percent this week.
The euro shot to one-year highs after Tuesday’s speech by European Central Bank President Mario Draghi bolstered expectations that a reduction in stimulus measures would be signaled as soon as September.
The S&P 500 and the Dow Jones Industrial Average were higher in late morning trading, while the Nasdaq was little changed as a recovery in tech stocks sputtered.
The dollar has fallen because of “doubts in the Fed raising rates again this year, the uncertain fate of Trump’s agenda, and number three has been how the global economy has been playing catch up to the U.S.,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Nike rose by as much as 8 percent after the world’s largest footwear maker said it would launch a pilot program with Amazon.com. U.S. consumer spending data for May also showed steady economic growth.
The Dow Jones Industrial Average rose 61.54 points, or 0.29 percent, to 21,348.57, the S&P 500 gained 4.76 points, or 0.20 percent, to 2,424.46 and the Nasdaq Composite added 5.88 points, or 0.1 percent, to 6,150.23.
U.S. Treasury yields rose after U.S. inflation data was largely in line with expectations and seen as unlikely to delay the Federal Reserve’s expected interest rate hike path.
“It’s not enough to make you optimistic about either delaying the Fed or about the potential for actual inflation,” said Aaron Kohli, interest rate strategist at BMO Capital Markets in New York.
Yields on benchmark 10-year notes touched their highest since May 17 in earlier trading.
Germany’s benchmark 10-year bond yield rose to its highest since mid-March and was set for its biggest weekly gain since 2015, backed by increased expectations for tighter monetary policy from the ECB.
Money markets are pricing in around an 80-percent chance that the ECB will hike rates over the next year. That’s up from just 20 percent earlier this month.
The specter of reduced stimulus from central bank policy makers also has weighed on European stocks. The pan-European STOXX 600 fell 0.2 percent on Friday and is headed for its biggest monthly loss in a year.
MSCI’s index of Asia-Pacific shares outside Japan fell 0.7 percent, after hitting a two-year high on Thursday. It is up 5.3 percent for the quarter and has risen 18.3 percent this year.In commodities, U.S. crude added 0.75 percent to $45.28 a barrel in its seventh straight session of gains, bringing its weekly increase to over 5 percent.
Global benchmark Brent crude gained 0.45 percent to $47.63 a barrel, poised for a nearly 10 percent rise this quarter.
(Reporting by Dion Rabouin; Additional reporting by Sam Forgione and Karen Brettell in New York, Abhinav Ramnarayan in London; Editing by Nick Zieminski)