BANGKOK — Shares slipped in Europe and Asia on Thursday as U.S. Treasury Secretary Janet Yellen headed to China seeking to soothe friction between the two largest economies.
Germany’s DAX lost 1% to 15,773.57 and the CAC 40 in Paris gave up 1.7% to 7,190.42. Britain’s FTSE 100 dropped 1.2% to 7,352.98. The future for the S&P 500 was 0.4% lower while that for the Dow Jones Industrial Average lost 0.5%.
Share prices had soared recently amid signs the U.S. economy is stronger than had been feared, fending off recession so far despite high interest rates.
Minutes from the Federal Reserve’s latest policy meeting released Wednesday showed that some central bank officials wanted to raise rates in mid-June, though in the end they voted unanimously to keep rates steady. The threat of further rate hikes has been weighing on investor sentiment.
The next major focus for the U.S. will be jobs data due out on Friday.
Markets are also watching for updates from Yellen’s talks with Chinese leaders in Beijing.
Hong Kong’s Hang Seng index dropped 3% to 18,533.05, partly due to heavy selling of Chinese banks shares after Goldman Sachs downgraded them, citing concerns about the slowing economy and lenders’ exposures to debt. The Shanghai Composite index declined 0.5% to 3,205.57.
Hong Kong-traded shares in the China Construction Bank Corp. lost 2.8%; China Merchants Bank dropped 1.4% and the Industrial and Commercial Bank of China sank 3.2%.
Japan’s Nikkei 225 lost 1.7%, closing at 32,773.02. In Australia, the S&P/ASX 200 dropped 1.3% to 7,157.80 and the Kospi in Seoul lost 1.1% to 2,551.10. India’s Sensex gained 0.3%, while shares fell in 1.7% Taiwan and 1.1% in Bangkok.
On Wednesday, the S&P 500 slipped 0.2% edging down from its highest level since April 2022. The Dow fell 0.4% and the Nasdaq gave back 0.2%.
A report on Wednesday showed growth for U.S. factory orders held steady in May, though economists expected to see an acceleration.
Meta Platforms, parent company of Facebook, Instagram and WhatsApp, rose 1.9% ahead of the launch of its new app that appears to mimic Twitter. That added to a stellar year where it’s already soared 144.6%.
Hope is rising that inflation is cooling enough to get the Federal Reserve to soon stop its hikes to rates, which undercut inflation by slowing the entire economy. Much of Wall Street expects the Fed to raise rates later this month and perhaps once more later this year, as the Fed has been hinting.
That could leave the U.S. stock market stuck in a holding pattern as everyone waits to see if a long-predicted recession does happen or not. The upcoming earnings reporting season could offer some clues, with companies telling investors how much profit they earned during the spring.
Yields were mixed in the bond market. The yield on the 10-year Treasury rose to 3.96% from 3.86% Monday, when bond trading ended early ahead of the Independence Day holiday. The 10-year yield helps set rates for mortgages and other important loans.
The two-year Treasury yield, which moves more on expectations for the Fed, held steady at 4.94%.
In other trading, U.S. benchmark crude oil rose 23 cents to $72.02 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday it gained $2 a gallon to $71.79 a barrel.
Brent crude, the pricing basis for international trading, advanced 15 cents to $76.80 a barrel.
The dollar fell to 143.99 Japanese yen from 144.64 yen. The euro slipped to $1.0852 from $1.0857.
