By Sinead Carew
NEW YORK (Reuters) – MSCI global shares ended Friday’s choppy session slightly lower as investors prepared for a possible U.S. government shutdown and adjusted their portfolios ahead of the end of the quarter.
Hardline Republicans in the U.S. House of Representatives on Friday afternoon rejected their leader’s bill to temporarily fund the government, making it all but certain that federal agencies will partially close starting Sunday.
Underlying US inflation pressures eased in August, with annual growth in non-food and energy prices falling below 4.0% for the first time in more than two years – seen as welcome news for the Federal Reserve as it considers the prospects for monetary policy.
Earlier data also showed that headline inflation in Europe is rising more slowly than expected and at its lowest level in two years.
But an earlier rise in stock prices on signs of easing inflation faded as the session progressed.
While New York Fed President John Williams said the central bank is likely at or near peak interest rates, he still expects the central bank will have to remain restrictive “for some time.”
“What drives everything is interest rates, and what ultimately has the Fed buying up the markets is that lower inflation is not a reason to cut interest rates,” said Robert Phipps, managing director of Per Stirling Capital Management, who described Williams’ comments as saw the most important factor. the biggest drag on stock markets on Friday, as it reminded investors that rates are likely to stay higher for longer.
In addition, Phipps also cited quarter-end portfolio adjustments, the prospect of a government shutdown and an extension of Detroit auto workers’ strikes as incentives for traders to sell stocks heading into the weekend.
Traders were betting on an 85.8% probability that the Fed would hold rates steady at its next meeting in November, compared to an 80.7% probability on Thursday, according to the latest data from CME Group’s Fedwatch tool ( NASDAQ:).
The figures fell 158.84 points, or 0.47%, to 33,507.5, the lost 11.65 points, or 0.27%, to 4,288.05 and the added 18.05 points, or 0.14% , to 13,219.32.
The MSCI index for shares around the world fell 0.04% on the day. For the month of September, interest rates fell 4.3%, which was the largest monthly decline in a year. For the quarter, it lost 6.6%, which was its first quarterly decline in a year.
In currencies, the dollar was on track for its biggest quarterly gain in a year and up for the 11th straight week, while the Japanese yen remained under scrutiny for possible government intervention.
The yen weakened 0.07% against the dollar at 149.43 per dollar. The , which measures the dollar against a basket of major currencies, rose 0.038%, while the euro rose 0.09% to $1.0568.
Sterling last traded at $1.22, up 0.02% after data showed Britain’s economic performance since the start of the COVID-19 pandemic was stronger than previously thought.
On U.S. Treasuries, the benchmark 10-year yield was well above the day’s low but still 1.6 basis points lower at 4.581%, down from 4.597% late Thursday. The 30-year bond last fell 2.3 basis points to yield 4.7065%. The latter fell 1.3 basis points to yield 5.0582%.
In energy markets, oil prices fell 1% on macroeconomic concerns and profit-taking, but rose around 30% this quarter as OPEC+ production cuts put pressure on global crude supply.
U.S. crude fell 1% to $90.79 a barrel to end at $95.31, down 0.07% on the day.
For precious metals, the gold price was lower that day. Given the monthly and quarterly declines, it was expected that the US central bank could keep interest rates high for longer.
fell 0.9% to $1,848.59 an ounce. The US fell 0.77% to $1,846.10 an ounce.
