Stocks slip as emerging markets bear brunt with crude below US$40

NEW YORK (BLOOMBERG) - A gauge of global stocks fell for a third day crude's foray below US$40 (S$53.6) a barrel and lackluster economic data in the U.S. kept fresh concerns about the state of the worldwide economy. Emerging markets sank.

The S&P 500 Index and European equities edged lower, with retailers leading American equities lower amid concerns about the strength of the United States consumer. Crude held steady near US$39.60 a barrel before an update on US oil inventories, while gold was near its highest price since July 11. Industrial metals declined and the Turkish lira tumbled amid rising inflation. Treasuries advanced as a four-day selloff in Japanese government bonds abated.

About 20 minutes into trade, the Dow Jones Industrial Average stood at 18,317.60, up less than 0.1 per cent. The broad-based S&P 500 added less than 0.1 per cent at 2,157.27, while the tech-rich Nasdaq Composite Index rose 0.1 per cent to 5,141.09.

July's gains in global equities have faltered at the start of August as crude descended into a bear market. And while investors are looking to central banks and governments around the world to shore up growth, the last two stimulus efforts haven't managed to ignite optimism. Japan's announcement Tuesday that it would boost spending by 4.6 trillion yen (S$60 billion) in the current fiscal year and a cut in interest rates by Australia's central bank both left investors underwhelmed.

"There's still too much uncertainty in Europe for there to be sustained gains," said Christoph Riniker, the Zurich-based head of strategy research at Julius Baer Group Ltd. "You have the banking issues, Brexit is weighing on sentiment, there's questions about economic growth, so we will continue to see volatility."

The MSCI All-Country World Index dropped 0.5 per cent as of 9:31 a.m. New York time (9.31 pm Singapore time). A slew of services purchasing managers' indexes were due Wednesday, with figures from China showing a slower pace of expansion in July and those for Britain pointing to the most severe decline in seven years after the U.K.'s vote in June to quit the European Union. A report on jobs growth in the U.S. showed employers added 179,000 positions in July, more than analysts had anticipated.

The Stoxx Europe 600 Indexslipped 0.2 per cent after dropping 1.9 per cent in the past two days to a three-week low. While more than 400 companies in the gauge fell, banks proved a bright spot, with an index of lenders - which lost 5.1 per cent the previous two days - gaining 1.4 per cent for the best performance among the Stoxx 600's 19 industry groups.