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The S&P and Nasdaq fell on Thursday with the technology sector snapping its recent rally while investors kept an eye on trade tensions and waited for U.S. and European central bank meetings.

U.S. Treasury yields fell on Thursday, reversing the prior day’s move as safe-haven demand rose on worries about trade disputes between the United States and its major trade partners ahead of the Group of Seven (G7) summit.

Investors worried about a showdown at the meeting, set for Friday and Saturday in Charlevoix, Quebec as U.S. President Donald Trump was expected to stick to his tough stance on trade after imposing tariffs on steel and aluminum imports from Canada, Mexico and the European Union last week.

“There’s caution associated with the G7 meeting which historically is neutral for the market. This G7 meeting doesn’t fit the template particularly with regard to trade,” said Quincy Krosby, chief market strategist at Prudential Financial.

Canada and Mexico have retaliated against a range of U.S. exports and the EU has promised to do so as well.

“Equally there’s a European Central Bank meeting and a Federal Reserve meeting next week. Both are paramount for the market’s direction,” said Krosby.

The Fed is widely expected to announce an interest rate hike on Wednesday but investors will be watching for clues on whether the U.S. central bank could raise rates a fourth time this year.

The Dow Jones Industrial Average rose 94.81 points, or 0.38 per cent, to 25,241.2, the S&P 500 lost 1.98 points, or 0.07 per cent, to 2,770.37 and the Nasdaq Composite dropped 54.17 points, or 0.7 per cent, to 7,635.07.

“The market is just a little exhausted. I think it is digesting the most recent actions,” said Ken Polcari, Director of the NYSE floor division at O’Neil Securities in New York.

“It can’t keep going up every day without a pullback. Logic tells you that it’s got to rest.”

Canada’s main stock index rose slightly on Thursday, led by gains in the energy sector, which benefited from rising oil prices.

The Toronto Stock Exchange’s S&P/TSX composite index was up 8.85 points, or 0.05 per cent, at 16,192.78.

Oil prices rose on concerns about a plunge in exports from Venezuela, helping the energy sector climb 2.1 per cent.

Global benchmark Brent crude surged nearly $2 a barrel on Thursday, lifted by concern about a steep drop in exports from Venezuela and worries OPEC may not raise production at its meeting this month.

Brent crude futures settled up $1.96 a barrel, or 2.6 per cent at $77.32. U.S. West Texas Intermediate (WTI) crude rose $1.22, or 1.88 percent to $65.95 a barrel.

Surging U.S. production has capped gains in WTI prices, widening the grade’s discount to Brent to more than $11 a barrel.

Biggest boosts to the TSX energy group were shares of Suncor Energy Inc, rising 2.8 per cent and Canadian Natural Resources Ltd, which gained 1.1 per cent.

The financial sector climbed 0.3 per cent and was the second biggest boost to the main index. Canadian Western Bank rose 8.5 per cent, while Bank of Montreal rose 0.7 per cent.

In New York, the S&P technology index fell 1.1 percent, led by heavyweights Microsoft and Facebook, which both fell more than 1.6 per cent. The losses followed a six-day rally that had pushed the index to record levels.

The Dow was boosted on Thursday by a 4.4-per-cent jump in McDonald’s shares after a report that the company was planning a new round of layoffs.

The S&P 500’s Energy index was the biggest gainer out of the benchmark’s 11 major sectors, helped by rising oil prices.

There were a few bright spots in the tech sector, with some chipmakers and optical stocks gaining after U.S. Commerce Secretary Wilbur Ross said Washington had reached a deal with China’s ZTE that would allow it to do business again with U.S. suppliers.

The euro climbed to a three-week peak on Thursday as expectations mounted that the European Central Bank will signal an early wind-down of economic stimulus.

The ECB, at its policy meeting next week, will debate whether to end bond purchases later this year, its chief economist, Peter Praet, a close ally of ECB President Mario Draghi, said on Wednesday. Other ECB officials echoed Praet’s sentiment.

The comments drove the euro as high as $1.1840, the highest level since May 17. The European single currency has risen for four straight sessions. Since hitting a 10-month low last week, it has gained nearly 3 percent.

The euro was last up 0.22 per cent to $1.1799. The dollar index, which tracks the greenback against a basket of major currencies, fell 0.24 percent.

“Any signal next week that the bank plans to go ahead with winding down its asset purchases in the fall could add to the euro’s broadly improved tone,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

The pan-European FTSEurofirst 300 index lost 0.19 per cent and MSCI’s gauge of stocks across the globe shed 0.03 per cent.

Emerging market stocks lost 0.30 per cent.

In the metals markets, copper hit a 4-1/2-year high, lifted by concerns over the potential that wage negotiations at the world’s biggest copper mine could disrupt supply.

Copper rose 0.37 per cent to $7,247.00 a ton.

Reuters

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/05/24 4:00pm EDT.

SymbolName% changeLast
CWB-T
CDN Western Bank
-0.7%27.04
PRU-N
Prudential Financial Inc
-1.37%117.73
BMO-T
Bank of Montreal
+0.21%131.1
CNQ-T
Canadian Natural Resources Ltd.
+0.84%105.67
SU-T
Suncor Energy Inc
+0.47%55.54
MSFT-Q
Microsoft Corp
+0.04%430.32

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