Traders work on the floor of the New York Stock Exchange (NYSE) in New York, US, May 18, 2018. (Photo: Reuters)
Political uncertainty in Italy weighed on the country’s stocks and bonds as well as the euro on Friday, while Wall Street wobbled amid tepid corporate earnings and trade concerns.
The US dollar’s rally continued, rising for a fifth straight session against a basket of currencies.
Investors were digesting asset moves from earlier this week, when the 10-year benchmark US Treasury yields broke above 3.1 percent and oil topped $80 a barrel. On Friday, oil prices were little changed and the 10-year bond yield retreated from a near-seven year peak.
A volatile week for Italian markets continued as two anti-establishment parties pledged to increase spending in a deal to form a new coalition government.
Yields on Italy’s 10-year bond rose to its highest point in more than seven months, while the country’s stocks slumped 1.5 percent.
The euro was down 0.17 percent to $1.1773, on track for a fifth session of declines.
“The possibility of a eurosceptic government in Rome is shaking investor confidence ... at this point a larger fiscal deficit and greater bond issuance (in Italy) does seem likely,” said David Madden, a strategist at CMC Markets.
Major European stock markets fell. The pan-European FTSEurofirst 300 index lost 0.29 percent, but posted gains for an eighth straight week.
On Wall Street, the Dow Jones Industrial Average rose 6.94 points, or 0.03 percent, to 24,720.92, the S&P 500 lost 6 points, or 0.22 percent, to 2,714.13 and the Nasdaq Composite dropped 20.59 points, or 0.28 percent, to 7,361.89.
A disappointing report by Applied Materials weighed on chip stocks.
A trader works at Frankfurt's stock exchange in Frankfurt, Germany, April 6, 2018. (Photo: Reuters)
Investors were watching developments in trade talks between the United States and China. On Friday, China denied it had offered a package to slash the US trade deficit by up to $200 billion. On Thursday, US President Donald Trump said China and other countries had become “very spoiled” on trade.
“There is still a concern around trade talks with China, but ... the stock market is cautiously optimistic that trade talks will lead to a good result,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
MSCI’s gauge of stocks across the globe shed 0.26 percent.
US 10-year Treasury yields declined from a near seven-year high as buyers emerged following a bond market selloff earlier this week spurred by worries about growing inflation and government borrowing.
Benchmark 10-year notes last rose 11/32 in price to yield 3.0688 percent, from 3.109 percent late on Thursday.
The dollar index rose 0.19 percent.
Oil prices were little changed, while Brent crude was on track for a sixth straight week of gains, boosted by plummeting Venezuelan production, strong global demand and looming US sanctions on Iran. The benchmark on Thursday broke through $80 for the first time since November 2014.
US crude rose 0.06 percent to $71.53 per barrel and Brent was last at $78.94, down 0.45 percent on the day.
