Stocks Hover Near Record Highs; Dollar Broadly Weaker–Update

By Riva Gold 
 Stock Market Quotes, Business News, Financial News from

Stocks steadied near record-highs Wednesday while the dollar came under pressure in quiet August trading.

Futures pointed to a 0.1% opening gain for the S&P 500, which ended Tuesday at its second-highest close of all time.

European stocks paused a five-session winning streak to trade flat after reaching their best levels since the U.K. referendum.

Investors have recently been weighing upbeat U.S. labor market data against the prospect of higher interest rates and a decline in oil prices, said Bjoern Jesch, chief investment officer at Union Investment.

Shares of European energy companies in Europe fell on Wednesday as Brent crude oil dropped 1.1% to $44.45 a barrel. Investors are concerned about higher levels of U.S. crude production and that an upcoming meeting among major oil producers may not alleviate the global supply glut.

For stock markets, “the oil price could become crucial again,” Mr. Jesch said, especially if U.S. growth slows down in the latter half of the year.

Steep falls in crude at the start of the year coincided with a big drop in global stock markets amid concerns about defaults in the U.S. energy sector and its impact on lenders.

Meanwhile in Europe, bank shares advanced, but the utility sector kept gains in check after E.ON SE reported a first-half net loss, sending shares in the German power utility down nearly 6%.

In government bonds, the yield on the 10-year U.K. government bond fell to a record low of 0.533%. The Bank of England on Tuesday failed to buy as many government bonds as it had hoped, on the second day of a new multibillion pound, bond-buying program designed to help revive Britain’s economy.

“With plummeting government bond yields and pensions schemes desperate not to increase deficits further, we could well see more bond purchase failures,” said Darren Bustin, head of derivatives at Royal London Asset Management in a note Wednesday.

The yield on the 10-year U.S. Treasury note fell to 1.530%. Yields move inversely to prices.

The dollar was broadly weaker in thin trading volume, and was last down 0.5% against the yen and 0.3% against the euro and British pound. Analysts said low summer trading volumes likely exaggerated moves in the foreign exchange market.

Earlier, markets in Shanghai and Australia ended with small losses. Stocks in Japan erased early gains spurred by speculation that the central bank was buying exchange-traded stock funds, as the yen strengthened against the dollar.

Data showed Japanese core machinery orders rebounded in June after falling for two straight months.

Gold rose 0.7% to $1,352 an ounce.

Megumi Fujikawa, Jenny Hsu and

Jon Sindreu

contributed to this article

Write to Riva Gold at[a]

Copyright (c) 2016 Dow Jones & Company, Inc.