Stocks Extend Losses; Oil Drops From Six-Year High: Markets Wrap - Bloomberg

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U.S. stocks extended losses as investors mulled the impact of crude oil prices near six-year highs and a Chinese crackdown on the nation’s big tech names. Treasury yields fell and a gauge of the dollar strengthened.

The S&P 500 retreated from a record high as U.S. markets reopened after the Independence Day holiday, with energy shares leading declines. Amazon.com and Apple pushed the Nasdaq 100 to another all-time high. Ride-hailing firm Didi Global Inc. plunged after a Chinese regulator ordered the removal of its platform from app stores, days after its U.S. listing. In Europe, gains in travel shares offset a decline in carmakers. A gauge of Asia-Pacific shares was little changed.

“We’ve had a mixed and cautious start to the week,” said Fiona Cincotta, senior financial markets analyst at City Index. “Rising oil prices have an inflationary impact and there are concerns that that is going to undermine the global recovery.”

West Texas Intermediate crude pared gains registered in the wake of Saudi Arabia’s decision to raise oil prices after a fight with the United Arab Emirates that brought an end to OPEC+ supply talks. Investors are assessing the risk of the conflict escalating into a price war that could hamper the global economic recovery and add to inflationary pressures. That, in turn, may strengthen the Federal Reserve’s case for tightening policy.

The risk of oil at $100 a barrel “is so correlated with short-run inflation that it will make the market very, very edgy, and we know that the Federal Reserve is both watching the economic data but also markets,” Alan Higgins, chief investment officer at Coutts & Co., said on Bloomberg Television.

LISTEN: Dennis Gartman, chairman of the University of Akron Endowment Committee, discusses OPEC policy with Nathan Hager on Bloomberg Radio.

Minutes due Wednesday from the Fed’s latest meeting may provide further context on the central bank’s hawkish pivot last month.

The Chinese crackdown has knocked about $42 billion off the market value of firms listed on the Nasdaq’s Golden Dragon China Index, which tracks Chinese ADRs, since the government derailed the planned IPO of giant Ant Group Co. in November. Further moves included a record $2.8 billion fine on Alibaba Group Holding Ltd. after an antitrust probe found it had abused its market dominance, sparking concern about the future of the sector.

Elsewhere, Australian bond yields rose as the central bank announced a slower pace of asset purchases, while reiterating that interest rates are unlikely to rise before 2024.

For more market commentary, follow the MLIV blog.

Here are some events to watch this week:

• FOMC minutes Wednesday
• The Group of 20 finance ministers and central bankers meet in Venice on Friday
• China PPI and CPI data released on Friday

These are some of the main moves in markets:

Stocks

• The S&P 500 fell 0.4% as of 10:30 a.m. New York time
• The Nasdaq 100 rose 0.3% to a record high
• The Dow Jones Industrial Average fell 0.7%, more than any closing loss since June 18
• The Stoxx Europe 600 fell 0.4%, more than any closing loss since June 30
• The MSCI World index fell 0.4%, more than any closing loss since June 18

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%, more than any closing gain since June 18
• The euro slipped 0.3%, more than any closing loss since June 18
• The British pound fell 0.3% to $1.3809
• The Japanese yen rose 0.3% to 110.65 per dollar

Bonds

• The yield on 10-year Treasuries declined six basis points, more than any closing loss since June 18
• Germany’s 10-year yield declined five basis points, more than any closing loss since March 1
• Britain’s 10-year yield declined seven basis points, more than any closing loss since March 2

Commodities

• West Texas Intermediate crude fell 1.4%, the most since June 28
• Gold futures rose 1.3%, the most since June 4

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Stocks Extend Losses; Oil Drops From Six-Year High: Markets Wrap - Bloomberg
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