NEW YORK, Oct. 13 (Reuters) – The US dollar fell from a three-week low on Tuesday, as stocks in Europe and the US eased, as news of a break in the market eased. Johnson & Johnson’s COVID-19 vaccine trial has led investors to take stock of recent rallies before pursuing further gains.
Some analysts said Tuesday’s equity market pullback was not a sign of deeper risk aversion, given that many investors are convinced there is more fiscal stimulus to come in the States- United.
Nonetheless, the decline in equity markets has been accompanied by stronger demand for traditional safe-haven assets such as the dollar and government bonds. A stronger dollar in turn weighed on gold prices.
China’s trade data released overnight that suggested the world’s second-largest economy was rebounding was widely dismissed by stock and bond markets, though it pushed up oil prices as investors hoped for a rebound. slow recovery in energy demand.
The S&P 500 fell 23.5 points, or 0.65%, to 3,511.20, but still within sight its all-time high of 3,580.84 hit on September 2. The Dow Jones Industrial Average fell 139.8 points, or 0.48%, to 28,699.30. The Nasdaq Composite erased earlier gains to slide 36.3 points, or 0.3%, to 11,842.03 points.
Johnson & Johnson shares fell 2.6% as investors digested news that a participant in its COVID-19 vaccine trial had fallen ill and the company would take at least a few days to assess the situation.
Investors see the rapid introduction of a vaccine as a key element in helping economies recover. J & J’s news comes after rival AstraZeneca, which uses similar technology, suspended testing of its experimental vaccine in September due to unexplained illness in one participant.
“The markets have already priced perfectly,” said Ken Polcari, chief market strategist at SlateStone Wealth LLC in Florida. “It’s ‘buy the rumor, sell the news.'”
European equities also struggled, with investors finding reason in news of Johnson & Johnson’s delayed trial to take profit.
The Euro STOXX 600 lost 0.77%, ending three consecutive days of gains, with the markets of Frankfurt, London and Paris reflecting its movements.
Sentiment for European and US stocks challenged earlier resilience in Asia, where Chinese stocks were improved by data which showed exports were up 9.9% in September and imports were trending towards a gain of 13.2 %, against a decline of 2.1% in August.
The data suggests Chinese exporters were recovering from the damage caused by the pandemic to overseas orders and helped blue-chip Chinese stocks rise 0.33%. The largest MSCI index for Asia-Pacific stocks outside of Japan, however, slashed earlier gains and was little changed at the end of Tuesday.
The general sluggishness of the stock markets contrasted with the dollar, which is on track for its best daily performance in three weeks, as the dollar index climbed 0.54% against a basket of other currencies to 93.546.
The Australian dollar, on the other hand, was hit by news that Beijing has stopped accepting shipments of Australian coal. The Aussie fell 0.76% to $ 0.7152.
Government bond yields mostly fell as demand for safe haven bonds strengthened.
The yield on benchmark 10-year Treasury bills fell to 0.7289%, a low since August 4.
Eurozone government bond yields have also held close to recent lows as large supply failed to erode a market supported by expectations of further easing from central banks.
The 10-year German Bund yield hit -0.538%, its lowest in just over a week. Italian and Greek 10-year benchmark debt both hit record lows.
A stronger dollar capped gold prices, which fell 1.5% to $ 1,893.01 an ounce.
Benefiting from promising trade data from China, Brent futures rose 73 cents, or 1.75%, to $ 42.45 a barrel. US West Texas Intermediate crude futures were up 81 cents, or 2.05%, to $ 40.24 a barrel.
Koh Gui Qing report; Editing by Steve Orlofsky