Global stocks fall for first time in five days as markets assess rate cut prospects

Global stock markets declined for the first time in five sessions on Thursday, as investors continued weighing the likelihood of falling borrowing costs following nearly two years of interest rate hikes by major central banks.

“If you don’t get confirmation of the slowing economic direction from every single piece of data every single day we risk running out of momentum on the big trades,” Societe Generale FX strategist, Kit Juckes, said. “Until we get to the point where rate cuts are just around the corner, everything is going to be very stop-start. The dollar selloff is stop-start, the bond market rally is really stop-start and the equity market is all over the place.”

Robust U.S. retail sales reported Wednesday served as a reminder that reducing rates may not be a straightforward path. Attention now turns to eurozone economic data due Friday.

Key government bond yields extended their downward trend Thursday amid a growing conviction that rate cuts are on tap for 2023. Germany’s 10-year bond yield dipped to 2.62% but held above Wednesday’s two-month low.

Asian indices fell overnight as new data showed ongoing weakness in China’s troubled property industry, denting optimism about an economic recovery there.

Japan reported mixed results, with exports rising for a second straight month in October but at a sharply slower pace due to plunging China-bound chip and steel shipments.