US stocks fall, oil rises as China drops quarantine rule

European and Asian equities gain ground as US dollar falters

NEW YORK, NEW YORK - NOVEMBER 17: Traders work on the floor of the New York Stock Exchange during morning trading on November 17, 2022 in New York City. Stocks are expected to fall as the stock market opened with interest rates rising as Federal Reserve officials signal more interest rate hikes to continue to slow down inflation. Michael M. Santiago/Getty Images/AFP (Photo by Michael M. Santiago / GETTY IMAGES NORTH AMERICA / AFP)

By Reuters

Published: Tue 27 Dec 2022, 9:32 PM

Wall Street’s benchmark S&P 500 and the Nasdaq fell on Tuesday after the release of US economic data, while oil prices rose after China said it would scrap its Covid-19 quarantine rule for inbound travellers, which was seen as a major step in reopening its borders.

US Treasury yields rose after economic data that showed the advance goods trade deficit for November narrowed to $83.35 billion from the prior month’s $98.8 billion, while a separate report pointed to continued struggles for the housing market as home prices fell under rising mortgage rates.

Oil pared gains as some US energy facilities shut by winter storms began to restart after the commodity earlier hit a three-week high as China’s latest easing of COVID-19 restrictions spurred hopes of a recovery in demand.

On the first day of the holiday-shortened trading week, the rise in US rates put pressure on shares in the heavy-weight rate sensitive technology sector, according to Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

“It’s a lack of anybody with the conviction to step in and buy right now,” said O’Rourke, who said further pressure came from a sharp decline in shares of electric car maker Tesla Inc .

The Dow Jones Industrial Average rose 113.48 points, or 0.34 per cent, to 33,317.41, the S&P 500 lost 5.67 points, or 0.15 per cent, to 3,839.15 and the Nasdaq Composite dropped 90.23 points, or 0.86 per cent , to 10,407.64.

Markets in some regions including London, Dublin, Hong Kong and Australia remained shut after the Christmas holiday.

The pan-European STOXX 600 index rose 0.19 per cent and MSCI’s gauge of stocks across the globe gained 0.03 per cent .

Emerging market stocks rose 0.27 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.53 per cent higher, while Japan’s Nikkei rose 0.16 per cent .

Benchmark 10-year notes were up 7.5 basis points at 3.822 per cent, from 3.747 per cent on Friday. The 30-year bond was last up 9 basis points to yield 3.9116 per cent , from 3.822 per cent . The 2-year note was last up 6.4 basis points to yield 4.387 per cent , from 4.323 per cent.

The dollar pared losses on Tuesday after China said it would scrap its COVID-19 quarantine rule for inbound travellers, which also boosted risk-related currencies such as the Australian dollar.

The dollar index, which measures the greenback against a basket of major currencies, was down 0.01 per cent , with the euro up 0.14 per cent at $1.065.

The Japanese yen weakened 0.37 per cent versus the greenback at 133.36 per dollar, while Sterling was last trading at $1.2019, down 0.34 per cent on the day.

Commodity currencies such as the New Zealand and Australian dollars also moved higher.

In energy futures, US crude recently rose 0.98 per cent to $80.34 per barrel and Brent was at $84.81, up 1.06 per cent on the day.

Gold prices rose as optimism surrounding decisions by top consumer China to ease Covid-19 restrictions weighed on the dollar, while resilient US yields cast a shadow over non-yielding bullion’s advance.

Spot gold added 1.5 per cent to $1,824.29 an ounce. US gold futures gained 1.09 per cent to $1,815.50 an ounce.