US, global stocks dip
US and global stocks, as well as the euro, dipped today as investors took profits before a German constitutional court ruling on the euro zone's new bailout fund, Dutch elections and potential new stimulus from the US Federal Reserve.
The European Central Bank's statement last week it was prepared to buy an unlimited amount of euro zone government bonds to contain the borrowing costs of Spain and Italy helped push US stocks to a four-year high, European shares to a 13-month high, and the euro to a four-month peak.
Investors hope the euro zone bond purchases will prove a turning point in resolving the euro zone's debt crisis, but a German constitutional court must rule on Wednesday on whether Germany can contribute to the European rescue fund which plays a crucial role in the ECB's plan.
On Wall Street, US stocks were lower at the opening with the S&P 500 down 0.1 per cent, the Dow Jones industrial average down 0.2 per cent, and the Nasdaq 100 down 0.3 per cent.
Meanwhile, the MSCI index of top global shares was down 0.48 per cent. Stock markets in London and Frankfurt were slightly higher, while stocks in Paris were lower.
On Wall Street, the benchmark S&P 500 pulled back slightly from its best weekly performance since June after data in China increased worries over a slowing global economy.
But talk of more monetary easing from the Federal Reserve, which meets this week, curbed losses.
The euro was down 0.2 per cent at $1.2787, still near Friday's high of $1.2817, which was its strongest level since May.
Chinese imports fell 2.6 per cent on the year in August, short of expectations for a 3.5 per cent rise.
The benchmark S&P 500 index rose 2.2 per cent last week, its biggest weekly gain in three months on increasing expectations for more stimulus measures, as a weaker-than-forecast jobs report on Friday served to further boost those expectations.
"We had a pop last week we haven't really given up on yet and the principal reason is because people, in the back of their minds, still feel as though there is going to be some move taken by the Fed to support the lagging numbers," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
American International Group Inc fell 2.2 per cent to $33.22 after the US Treasury Department said it will sell most of its stake in the insurer, making the government a minority investor for the first time since it rescued the company in the depths of the financial crisis four years ago.