(Reuters) – The dollar reached multi-year highs against both the yen and euro on Monday, adding to gains built on the Bank of Japan’s surprising stimulus announcement from last week, but equity markets slipped after weak data out of China and Europe.
U.S. stocks were little changed, as investors paused after a sharp rally on Friday and ahead of U.S. elections on Tuesday, although economic data pointed to a slowly strengthening economy.
“The bull market may be old and wrinkly, but it is still alive and there’s nowhere else for investors to really go besides U.S. equities,” said Paul Schatz, president and chief investment officer at Heritage Capital in Woodbridge, Connecticut.”
An index of global equities slipped after data showing China’s economy losing momentum. The MSCI all-country world equity index .MIWD00000PUS was off 0.5 percent.
China’s services sector grew at its slowest pace in nine months, the National Bureau of Statistics said, as a cooling property sector weighed on demand.
Another official purchasing managers’ index survey on Saturday showed factory activity in the world’s second-largest economy unexpectedly fell to a five-month low in October as firms fought slowing orders and rising borrowing costs.
Final European manufacturing PMI data for October showed activity in France contracted by less than first reported, while German factory activity rebounded after a slight shrinkage in September.
European shares fell, pulling back from a four-week high after sharp gains last week. The pan-European FTSEurofirst 300 index .FTEU3 dropped 0.8 percent. [.EU]
Two U.S. industry reports showed the manufacturing sector continues to expand, while automakers reported their strongest October sales in years.
The Dow Jones industrial average .DJI was down 19.24 points, or 0.11 percent, at 17,371.28. The Standard & Poor’s 500 Index .SPX was up 1.27 points, or 0.06 percent, at 2,019.32. The Nasdaq Composite Index .IXIC was up 18.13 points, or 0.39 percent, at 4,648.87.
The BOJ last week said it would boost its massive stimulus spending, due to worry about weak growth. There are expectations the European Central Bank, which meets on Thursday, will also eventually resort to large-scale purchases of government bonds.
The dollar climbed as high as 113.90 yen JPY=, its highest level since December 2007 and was last up 1.3 percent at 113.73.
The euro EUR= hit a low of $1.2441, its weakest since August 2012. It was last down 0.2 percent at $1.2498.
The dollar .DXY touched highs not seen since mid-2010 versus a basket of currencies and was on track for a fourth straight day of gains.
The benchmark 10-year U.S. Treasury US10YT=RR note was down 13/32, the yield at 2.3802 percent.
The strong dollar and the Chinese data helped push crude oil prices lower. Brent crude LCOc1 was last down 0.5 percent at $85.33 a barrel while U.S. crude shed 0.6 percent to $80.07.
The greenback’s strength also led to a decline in gold XAU=, which held near four-year lows. The metal last traded down 6.6 percent $1,168.74 an ounce.
Author: Chuck Mikolajczak, Reuters