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Global equities and U.S. Treasury yields were lower on Wednesday as bearish sentiment dominated markets, with investors focused on a much-anticipated vote in Congress on raising the U.S. debt ceiling.
The U.S. House of Representatives will vote on a bipartisan agreement on WEDNESDAY that would raise the $31.4 trillion ceiling and let the government to avoid default.
As Republicans possess a narrow majority in the House, passage of the plan could prove challenging. How many House Democrats will support it is unknown.
Ryan Detrick, chief market strategist at Carson Group, said: “The jitters are expected as there is a very small chance there could be a problem with the vote later tonight.”
According to him, month-end profit taking was also in progress. “We don’t anticipate that, but until the final paper is signed on the president’s desk some apprehension isn’t abnormal,” he said.
The 50-country MSCI world equity index, which measures stocks, fell 1.05%. European stocks fell 1.15 percent.
Wall Street’s three primary indexes all declined, with the technology, financials, consumer discretionary, and industrials sectors leading the way. The Nasdaq Composite slid 0.77% to 12,916.85, the S&P 500 lost 0.81% to 4,171.32, and the Dow Jones Industrial Average dropped 0.75% to 32,793.68.
Benchmark U.S. 10-year Treasury yields moved lower to 3.656%.
The U.S. dollar surged to a more than two-month high after statistics revealed that China’s recovery is faltering and European inflation is declining faster than anticipated.
The dollar index rose 0.404%, with the euro down 0.67% at $1.0661.
Following disappointing economic statistics from China, the world’s largest importer, oil prices declined due to fears about demand. While U.S. West Texas Intermediate crude (WTI), which is the benchmark for Brent crude, declined 0.68% to $68.99 per barrel, Brent crude futures for August delivery were down 0.91% at $72.87 per barrel.
Despite the dollar’s resilience, gold prices rose, but bullion was still headed for its first monthly decline in three months due to optimism over a U.S. debt settlement.
U.S. gold futures increased 0.70% to $1,971.80 per ounce, while spot gold increased 0.7% to $1,972.29 per ounce.
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