Stocks decline as yields, dollar rise amid global demand worries

NEW YORK, (Reuters): World stock indexes eased and the US dollar rose on Tuesday as economic data in China and Europe fueled worries about slowing global growth.

Also, U.S. benchmark Treasury yields jumped, while the Aussie dollar fell after the Reserve Bank of Australia kept rates steady.

A private-sector survey showed on Tuesday that China’s services activity expanded at the slowest pace in eight months in August as weak demand continued to dog the world’s second-largest economy.

Data from the euro area and Britain also showed a decline in business activity last month, with the dominant services industry in both regions falling into contraction.

“Worries are on the rise about a China and Europe-led slowdown in global growth. As a result, the dollar is catching a solid safe haven bid,” said Joe Manimbo, senior market analyst at Convera, in Washington.

The U.S. dollar index was up 0.5 per cent at 104.69. The index hit a near 6-month high of 104.85 earlier in the session.

Wall Street stocks dipped with growth stocks as Treasury yields rose.

The Dow Jones Industrial Average fell 47.25 points, or 0.14 per cent, to 34,790.46, the S&P 500 lost 8.04 points, or 0.18%, to 4,507.73 and the Nasdaq Composite dropped 11.31 points, or 0.08 per cent to 14,020.51.

The pan-European STOXX 600 index lost 0.23 per cent and MSCI’s gauge of stocks across the globe shed 0.40 per cent

Some investors are hoping that Beijing’s policy stimulus may be enough to stabilize the Chinese economy.

In the US focus is also on Federal Reserve speakers and the outlook for interest rates.

Fed Governor Christopher Waller said on Tuesday the latest round of economic data was giving the U.S. central bank space to see if it needs to raise interest rates again while noting that he currently sees nothing that would force a move toward boosting the cost of short-term borrowing again.

Benchmark 10-year notes were up 8.1 basis points to 4.254 per cent.

The Australian dollar shed over 1 per cent and dropped to its lowest level since November after the country’s central bank held rates at 4.10 per cent and said recent data were consistent with inflation returning to the 2 per cent to 3 per cent target range in late 2025.

In commodities, US crude recently rose 2.64 per cent to $87.81 per barrel and Brent was at $90.95, up 2.19 per cent on the day.

US markets were closed on Monday for the Labor Day holiday, leading to light trading volumes.