Global Markets – Dollar Falls, US Stocks Fall on Inflation Fears

* The global stock index has stopped, and is looking forward to the weakest month since March 2020

US stocks affected by inflation and Amazon profits

* Dollar falls intraday, posting biggest gain in one month since 2015

* US oil futures hold lower, gold rises (afternoon trading updates, comment added)

by Sinad Karo

NEW YORK (Reuters) – The U.S. dollar index fell from a 20-year high and stocks sold off on Wall Street on Friday with the latest economic data, a quarterly report and a disappointing outlook for highlighting rising inflation.

In US Treasuries, benchmark 10-year yields capped their biggest monthly gain since December 2009 by rising near year-highs after economic data.

Stocks came under pressure after data showed that monthly inflation rose by the most since 2005 while US consumer spending rose more than expected in March amid strong demand for services. Also, US labor costs rose in the first quarter by the most in 21 years, indicating rising wage inflation, supporting Fed policy tightening.

Ian Lingen, head of US price strategy at BMO Capital Markets, notes that the data could trigger a more hawkish Fed response.

“The operating assumption in the market at the moment is that the Fed has sufficient flexibility to increase the pace of the rally in response to any further acceleration of inflationary pressures,” he said. The Dow Jones Industrial Average fell 627.49 points, or 1.85 percent, to 33288.9 points, the Standard & Poor’s lost 116.1 points, or 2.71 percent, to 4171.4 points, and the Nasdaq Composite fell 412.31 points, or 3.2 percent, to 12459.22.

While the pan-European STOXX 600 index rose 0.74% and the MSCI gauge of stocks worldwide fell by 1.19%.

On the last trading day of April, the global index was on track for its biggest monthly decline since March 2020.

Amazon shares fell about 16% after the e-commerce giant delivered a disappointing quarter and forecast late Thursday as it was swamped by rising costs to operate its warehouses and deliver packages to customers.

Emerging market shares rose 2.29%.

The Russian ruble hit a two-year high against the dollar and the euro on Friday as capital controls helped it weather another larger-than-expected interest rate cut, and Russia appears to be making last-ditch efforts to avoid a default.

Other emerging market currencies also rose as the dollar weakened.

While the dollar seemed poised to pounce over a 6-day period against a basket of currencies on Friday, it was still on track for its biggest monthly gain in seven years as concerns about the global economy and a hawkish Federal Reserve boosted demand for the greenback in April. .

Benchmark US 10-year yields rose to 2.981% on April 20, the highest level since December 2018, on track to post gains for five straight months.

The benchmark 10-year note fell 4/32 to 2.8792% from 2.863 late Thursday.

US crude futures closed lower after three consecutive days of gains as investors weighed concerns about Russian supply disruptions against the impact of the COVID-19 shutdown in China, the world’s largest importer of crude.

US crude oil futures settled at $104.69, down 67 cents, or 0.64%. Brent crude futures settled at $109.34, up $1.7, or 1.63 percent.

Gold prices rose 1% on Friday after the dollar fell, but the precious metal was about to end the month lower on bets on Fed policy tightening.

“The GDP and cost index data for employment data showed inflation remains fairly high, and this supports gold in general,” said Edward Meir, analyst at ED&F Man Capital Markets.

And the spot gold price rose 0.8 percent to $1,908.54 an ounce.

(Reporting by Sinad Karo, Chuck Mikolajchak, Karen Brittel and David Randall in New York, Sujata Rao and Mark Jones in London, Alon John from Hong Kong and Ashita Shivaprasad; Editing by Kim Coogill, Chizu Nomiyama and Louise Heavens)

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