By Isla Binnie
NEW YORK (Reuters) -Global stock indexes fell mostly on Wednesday as potential U.S. trading restrictions on chip equipment dragged down technology stocks, while Treasury yields and the dollar both hit four-month lows as Federal Reserve officials said the central bank came closer to the border. lowering interest rates.
The Japanese yen rose sharply, in a move believed to be the latest in a series of interventions from Tokyo to boost the long-depressed currency.
According to CME Group’s (NASDAQ:) FedWatch tool, a US rate cut by September is considered to have a 98% probability. Lowering interest rates is generally seen as a way to spur economic growth.
“We’re hearing a chorus change in Fed speakers preparing markets for a rate cut starting in the latter part of the third quarter,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Among the comments, Fed Governor Christopher Waller and New York Fed President John Williams both pointed to the shorter horizon to looser monetary policy.
The benchmark stock index lost 78.93 points, or 1.39%, to 5,588.27 and the technology index lost 512.41 points, or 2.77%, to 17,996.93.
The Dow Jones, which has underperformed the other two major U.S. stock indexes this year, ended higher on Wednesday, posting its third straight record closing high.
Chipmaker shares fell after a report that the United States is considering restricting technology imports to China, coupled with Republican presidential candidate Donald Trump saying Taiwan, a major manufacturing center, should pay the U.S. for its defense.
The MSCI index for global shares fell 7.47 points, or 0.90%, to 823.78.
Shares of chip manufacturer Nvidia (NASDAQ:) fell more than 6% after a difficult Asian session for Taiwan’s TSMC, which closed 2.4% lower.
Earlier this week, investors had formed a cautiously optimistic view of a second American presidency for Trump, who is running against incumbent Democrat Joe Biden.
“Many strategists have suggested that Trump is bullish on stocks, and I’m just not sure,” said Benjamin Melman, global chief investment officer at Edmond de Rothschild Asset Management.
YEN JUMPS
The yen has made some outsized moves in recent days, rising sharply from a 38-year low of 161.96 per dollar on Thursday and Friday, sudden rallies that market participants said showed signs of Japanese government intervention.
Bank of Japan data released on Tuesday showed Tokyo may have spent 2.14 trillion yen ($13.5 billion) on interventions on Friday. Combined with the estimated amount spent on Thursday, Japan is believed to have bought almost 6 trillion yen through intervention last week.
The , which measures the dollar against a basket of currencies, fell 0.43% to 103.76 after hitting a four-month low of 103.64 earlier in the session. The euro rose 0.34% to $1.0934.
Against the yen, the dollar weakened 1.33% to 156.23, after falling as low as 156.09, a level last seen on June 12.
The softer dollar stimulated demand for precious metals.
lost 0.45% to $2,457.54 an ounce due to profit-taking, after hitting a record high of $2,482.29 earlier in the session.
Gold, priced in dollars, has a strong inverse relationship with the US currency, as well as with government bond yields.
The yield on U.S. 10-year Treasury notes fell 1.5 basis points to 4.152%, down from 4.167% late Tuesday. During the session, yields reached 4.146%, the lowest level since March 13.
Softer jobs data and declining inflation have pushed government bond yields lower this month, raising the likelihood of an impending rate cut.
Oil prices rose to settle at $82.88 per barrel, up 2.63% on the day, while rising to $85.01 per barrel, up 1.53% on the day.
