World shares at record high as investors count on Fed largesse

Global stock markets retreated modestly after a seven-day run of record highs, as investors weighed weaker-than-expected U.S. hiring data against continued expectations that the Federal Reserve will hold off on tapering its bond-purchase stimulus, according to Reuters reporting by Chris Prentice and Danilo Masoni. The MSCI all-country world equity index pulled back from its all-time high, while the Dow Jones Industrial Average fell 0.76% to around 35,100 and the S&P 500 slipped 0.34% to 4,520.03; the Nasdaq Composite edged up 0.07% to 15,374.33.

The pullback followed a U.S. jobs report showing employers added 235,000 jobs in August -- the fewest in seven months -- with leisure and hospitality hiring stalling out, Reuters reported. In Europe, the STOXX 600 index fell 0.5%. Germany's 10-year bond yield hit its highest level since mid-July.

Asian markets moved in the opposite direction: Japan's Nikkei 225 crossed 30,000 for the first time since April, and the Topix index rose 1.1% to a 31-year high, according to the report. China's Shanghai Composite gained 1.5% to its highest level since February, after Chinese exports and imports for August exceeded expectations.

Why the record run cooled

Jeffrey Carbone of Cornerstone Wealth was quoted by Reuters attributing the slowdown in the rally to stretched valuations meeting a softening economy: "The combination of exorbitant expectations, nosebleed valuations and slowing macro environment make the go-forward reward/risk outlook less attractive." The report tied investor caution to uncertainty over how the softer jobs number would factor into the Federal Reserve's coming decisions on tapering, following Fed Chair Jerome Powell's remarks at the Jackson Hole symposium in August.

The broader run leading into the pullback

A separate Reuters dispatch from the same week, published as the MSCI all-country index notched its eighth consecutive day of gains, quoted AllianceBernstein portfolio manager Masahiko Loo on why investors kept betting the Fed would hold off: "Now that the tapering announcement from the Fed in September seems unlikely, we should expect 'Goldilocks' markets to continue" through the fall. That same Reuters reporting put the 10-year Treasury yield at 1.339%, the euro trading at $1.1884 -- just below a one-month peak ahead of a European Central Bank policy decision -- and crude oil futures down slightly to $69.21 a barrel after Saudi Arabia cut prices for Asian buyers, a move that reporters said had revived demand concerns even as equities kept climbing.

That earlier Reuters dispatch, filed as U.S. markets reopened after the Labor Day holiday weekend, also described Europe's STOXX 600 regional index as dipping a modest 0.1% in early trading while still holding close to the lifetime peak it had reached in August, underscoring how narrow the day-to-day pullbacks were even as the broader record-setting run continued. U.S. stock-index futures were pointing to a positive open on Wall Street that same session, reporting noted, before the jobs data described above shifted sentiment later in the week.

What remains unresolved

The retrieved reporting does not specify a firm date for any Fed tapering announcement, describing market positioning as based on anticipation rather than a confirmed decision. It also does not detail how individual sectors performed beyond the headline index moves.

US In News compiled this archived account from contemporaneous coverage by Reuters (via Investing.com). It restores a story originally published on this site in September 2021; figures are as reported at the time.