World stocks whipsaw on pandemic worries, gold gains

By Koh Gui Qing and Carolyn Cohn

NEW YORK/LONDON (Reuters) – U.S. and European shares whipsawed between modest gains and losses on Wednesday as investors tried to brush aside market risks to focus on the positive, but caution prevailed in the gold market with prices jumping more than 1%.

Reports that some European countries have started to close schools and cancel surgeries due to a resurgence in the COVID-19 pandemic weighed on sentiment, though European shares still managed to trim earlier losses.

In the United States, investors looked to positive earnings reports by investment bank Goldman Sachs Group and UnitedHealth Group Inc, the largest U.S. health insurer, and tried to shelve concerns over two stalled trials for COVID-19 treatment and vaccine that rattled markets on Tuesday.

Investors are hoping that a quick development of a treatment or vaccine for COVID-19 would end the pandemic and aid a recovery in the world economy.

“Bulls are looking to get back on track this morning,” Paul Hickey, a co-founder of Bespoke Investment Group LLC, wrote in a note, but added that an upbeat mood may not hold.

Major U.S. stock indices had given up early gains by 1426 GMT. The S&P 500 was largely flat at 3,512.90, and the Dow Jones Industrial Average was also little changed at 28,655.36. The Nasdaq Composite fell 30 points, or 0.3%, to 11,832.32.

The pan-European STOXX 600 narrowed losses and was down 0.1%, while markets in Frankfurt and Paris were up 0.1% and flat respectively. London, buffeted in part by Brexit angst, dropped 0.6%. World stocks were little changed but still within sight of an all-time high struck on Sept. 3.

Moving beyond bar and pub closures, the Czech Republic shifted schools to distance learning and hospitals started cutting non-urgent medical procedures to free beds.

Moscow authorities said on Wednesday they would introduce online learning for many students starting on Monday, while Northern Ireland announced schools would close for two weeks.

Asian stocks also had a lackluster showing. MSCI’s broadest index of Asia-Pacific shares outside of Japan had tracked Wall Street’s losses overnight to end a seven-day rally.

The index was last down 0.11%, having toppled from a two-and-a-half-year high of 588.76 touched on Tuesday. Chinese shares closed down 0.7%.

Bolstered by uncertainty around the pandemic, the price of gold, a safe-haven asset, climbed by more than 1% to a high of $1,912.51 an ounce.

Government bonds also benefited from investor caution. German bund yields, which move inversely to prices, hit their lowest since May, while the 10-year U.S. Treasury yield dipped to 0.7173%.

The U.S. dollar softened after pulling its best day in three weeks on Tuesday. Its index against a basket of six major currencies fell 0.3% to 93.25. That helped the euro to firm slightly to $1.1768.

Concerns that fuel demand will continue to falter as rising coronavirus cases across Europe and in the United States, the world’s biggest oil consumer, dragged on oil prices. Brent and U.S. crude pared earlier gains and were at $43.19 and $40.99 a barrel, respectively.

(Reporting by Koh Gui Qing; Editing by Lisa Shumaker)

Shares surge to 2-month high, dollar climbs ahead of Trump speech

FILE PHOTO - Visitors look at an electronic stock quotation board at the Tokyo Stock Exchange (TSE) in Tokyo, Japan, October 1, 2018. REUTERS/Toru Hanai

By Lewis Krauskopf

NEW YORK (Reuters) – World stocks raced to a fresh two-month high on Tuesday to keep up their fast start to 2019 while the U.S. dollar strengthened for a fourth straight session as investors awaited President Trump’s annual State of the Union speech later in the day.

With European shares posting strong gains and Wall Street opening solidly higher, MSCI’s gauge of stocks across the globe gained 0.60 percent, rising for a sixth straight session as it hit a two-month high.

Trump was due to give his address at 2100 ET (0200 GMT), with investors awaiting indications of progress in U.S.-China trade talks and watching for signs of tensions with Democrats following a 35-day partial federal government shutdown.

The Federal Reserve’s dovish recent statement on interest rate policy, along with optimism over U.S.-China tensions, has fueled recent risk appetite, even as estimates for U.S. corporate earnings have been falling.

“Despite the State of the Union tonight, investors seem increasingly certain that we are going to avoid any escalation of the trade tensions with China and avoid another government shutdown,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab in Boston.

“Investors are viewing policy considerations offsetting falling earnings expectations,” Kleintop said.

On Wall Street, the Dow Jones Industrial Average rose 168.25 points, or 0.67 percent, to 25,407.62, the S&P 500 gained 11.94 points, or 0.44 percent, to 2,736.81 and the Nasdaq Composite added 55.71 points, or 0.76 percent, to 7,403.24.

Shares of Esta Lauder Cos and Ralph Lauren reacted favorably to the companies’ respective quarterly reports.

Fourth-quarter earnings for companies on the benchmark S&P 500 index were on track to have climbed 15.4 percent, but profit in the first quarter is now expected to rise by only 0.5 percent, according to IBES data from Refinitiv.

The pan-European STOXX 600 index rose 1.33 percent, as BP shares jumped after its earnings report.

The dollar index, which measures the greenback against a basket of currencies, rose 0.22 percent, up for a fourth straight session, with the euro down 0.24 percent to $1.1408.

Continued recovery in investors’ appetite for risk-taking exerted pressure on safe-haven currencies, dragging the Swiss franc to an 11-week low against the dollar.

U.S. Treasury yields fell as investors started to price in the Fed’s dovish interest rate outlook amid an uncertain global economic outlook.

“Yields are consolidating around levels that are more consistent with the new position at the Fed which is … it is effectively on hold at least in the next six months,” said John Herrmann, rates strategist at MUFG Securities in New York.

Benchmark U.S. 10-year notes last rose 7/32 in price to yield 2.6983 percent, from 2.724 percent late Monday.

U.S. crude fell 0.24 percent to $54.43 per barrel and Brent was last at $62.60, up 0.14 percent on the day.

(Additional reporting by Gertrude Chavez-Dreyfuss and Saqib Iqbal Ahmed in New York, Marc Jones in London; Editing by Bernadette Baum)

Strong U.S. jobs data boosts stocks, soothes economic fears

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 27, 2018. REUTERS/Eduardo Munoz

By April Joyner

NEW YORK (Reuters) – World stock markets rallied on Friday while bond yields rose after sharply declining earlier in the week as Beijing announced a new round of trade talks with Washington and U.S. employment data pointed to economic strength.

Equities around the globe were buoyed by the news that China and the United States will hold trade talks in Beijing on Monday and Tuesday.

In the United States, stocks got another boost as stronger-than-expected U.S. employment data soothed some concerns of slowing economic growth. That was welcome news to investors after sharp declines on Thursday following Apple Inc’s cut in its revenue forecast.

“As nervous as we all were yesterday on this Apple news, this does help to soften that a bit, that maybe the consumer or the average person still is more confident than we are giving them credit for,” said J.J. Kinahan, chief market strategist at TD Ameritrade in Chicago.

The strong U.S. jobs report raised questions among some market watchers about the Federal Reserve’s monetary policy, which has been scrutinized in recent weeks as economic worries have mounted. However, Wall Street surged further after Fed Chair Jerome Powell spoke at a meeting of the American Economic Association and said he would not resign if asked to by U.S. President Donald Trump.

Conversely, safe-haven assets that had climbed this week as equity markets were roiled came down substantially. Treasury yields rose sharply after the release of U.S. employment data, and the dollar gained 0.6 percent against the yen. Spot gold prices, which reached a six-month peak on Thursday, dropped 0.8 percent.

In U.S. equities, the Dow Jones Industrial Average rose 681.9 points, or 3.01 percent, to 23,368.12, the S&P 500  gained 66.58 points, or 2.72 percent, to 2,514.47 and the Nasdaq Composite added 218.87 points, or 3.39 percent, to 6,682.37.

The pan-European STOXX 600 index jumped 2.67 percent, while MSCI’s gauge of stocks across the globe gained 2.16 percent.

Benchmark 10-year Treasury notes last fell 32/32 in price to yield 2.6641 percent, from 2.553 percent late on Thursday.

Earlier, an announcement from China’s central bank that it would cut the amount of cash that banks must hold as reserves for the fifth time in the past year lifted Asian and European stocks. The move frees $116 billion for new lending as Beijing tries to reduce the risk of a sharper economic slowdown.

Japanese equity markets, which opened for their first session of the new year, were the main exception, weighed down by the sharp rise in the yen in the past few days.

The news of the U.S.-China trade talks boosted oil prices, with both Brent and U.S. crude futures around 4 percent higher.


(Reporting by April Joyner; Additional reporting by Virginia Furness, Swati Pande, Wayne Cole and Chuck Mikolajczak; editing by Jon Boyle, Larry King and Dan Grebler)

Dramatic stock market rally runs out of steam

A screen displays the Dow Jones Industrial Average after the close of trading on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 26, 2018. REUTERS/Jeenah Moon

By Trevor Hunnicutt

(Reuters) – A dramatic global stock rally faded on Thursday after a fall in Chinese industrial profits offered a reminder of the pressures on the world economy.

Still, an index of world stocks stayed off near two-year lows hit earlier this week before Wednesday’s 1,000 point-plus surge on the U.S. Dow Jones index, which was attributed to the strongest holiday sales in years.

“Yesterday was a blowout day for U.S. equity markets which triggered optimism that this could be a key reversal day but the upward momentum has not really followed through,” said Lee Hardman, an analyst at MUFG in London.

“One reason is that maybe the sharp move higher was driven by year-end rebalancing, which exaggerated the scale of the rebound, and now we have reverted to the trend which has been in place most of this month.”

That trend is toward weaker stocks, U.S. dollar and oil prices along with stronger demand for safe-haven government bonds, gold and Japanese yen.

MSCI’s gauge of stocks across the globe shed 0.95 percent and U.S. crude fell 2.01 percent to $45.29 per barrel after each staged big rallies the day prior. [O/R]

Markets in mainland China, as well as Hong Kong, closed weaker after data showed earnings at China’s industrial firms dropped in November for the first time in nearly three years.

A Reuters report added to the gloom around the world’s second-biggest economy, saying the White House was considering barring U.S. firms from buying telecoms equipment from China’s Huawei and ZTE.

That and an ongoing partial U.S. government shutdown overshadowed positive noises from the U.S. government on trade talks with Beijing, its efforts to temper the White House’s recent broadsides against the Federal Reserve and a report showing the number of Americans filing applications for jobless benefits fell marginally last week in a sign of labor market strength.

The Dow Jones Industrial Average fell 394.04 points, or 1.72 percent, to 22,484.41, the S&P 500 lost 42.07 points, or 1.70 percent, to 2,425.63 and the Nasdaq Composite dropped 134.06 points, or 2.05 percent, to 6,420.29. [.N]

“So far, we don’t see a shift in fundamentals. Trade tensions between the U.S. and China remain the biggest unknown factor for 2019,” said Hussein Sayed, a strategist at online brokerage FXTM.

There were also renewed concerns in Italy, where troubled lender Banca Carige was denied a cash call by its largest shareholder, pushing its shares down 12.5 percent.

The concerns over a faltering global economy and signs of an oil glut pressured crude prices a day after their 8 percent rally. U.S. Treasury prices also reversed direction after falling sharply on Wednesday, with the 10-year note last rising 15/32 in price to yield 2.7452 percent. [US/]

Another safe-haven, gold, was up 0.6 percent to $1,274.52 an ounce, remaining just below a six-month peak hit earlier this week. [GOL/]

Investors also bought yen, strengthening that currency 0.56 percent against the greenback at 110.74 per dollar. Against a basket of trading partners’ currencies, the dollar was down 0.35 percent. [FRX/]

“We have started to see the yen regain its place as the safe haven of choice,” MUFG’s Hardman said.

(Additional reporting by Abhinav Ramnarayan and Sujata Rao in London; Editing by Chizu Nomiyama)

World stocks index dips after breaking record, oil near 2-1/2-year high

World stocks index dips after breaking record, oil near 2-1/2-year high

By David Randall

NEW YORK (Reuters) – A global rally in stocks paused on Tuesday, halting a nine-day advance that had sent the most widely tracked index of world stock markets to record highs.

All three of Wall Street’s major indexes dipped in U.S. afternoon trading, sending the MSCI 47-country ‘All World’ index <.MIWD00000PUS> down slightly after it had hit record highs above 500 points after Japan’s Nikkei <.N225> notched its best level since 1992 and Germany’s DAX <.GDAXI> scored a record high. The index is up nearly 20 percent for the year to date.

“You’ve had almost a perfect backdrop for equities,” said Pictet Asset Management’s global strategist Luca Paolini. “You have acceleration in nominal growth, earnings are between 10-15 (percent higher) globally and whatever you look at is pretty much in double digits.”

After hitting all-time highs shortly after the opening bell, the Dow Jones Industrial Average <.DJI> fell 11.21 points, or 0.05 percent, to 23,537.21, the S&P 500 <.SPX> lost 2.8 points, or 0.11 percent, to 2,588.33 and the Nasdaq Composite <.IXIC> dropped 24.31 points, or 0.36 percent, to 6,762.13.

Financial stocks <.SPSY> led the U.S. market lower, with the S&P 500 financial sector losing 1.2 percent, the largest decline of any sector. U.S. Treasury yields hit a two-week low.

Oil prices fell slightly after posting the biggest rise in six weeks following the Saudi crown prince’s move to tighten his grip on power and crank up tensions between the kingdom and Iran.

U.S. crude <CLcv1> fell 0.28 percent to $57.19 per barrel and Brent crude futures <LCOcv1> were last at $63.73, down 0.84 percent after touching a peak of $64.65.

The dollar was also on the move amid signs of more change at the Federal Reserve, while President Donald Trump’s Republican party pushes ahead with its tax cut program.

The dollar index <.DXY> rose 0.24 percent, with the euro <EUR=> down 0.28 percent to $1.1576 – the single currency’s lowest since mid-July. The Japanese yen weakened 0.23 percent to 113.97 per dollar <JPY=>, while sterling <GBP=> was last trading at $1.3153, down 0.13 percent on the day.

The Mexican peso lost 0.83 percent to 19.17 pesos to the U.S. dollar <MXN=>. The Canadian dollar <CAD=> fell 0.61 percent versus the greenback at C$1.28 per dollar.

Benchmark 10-year notes <US10YT=RR> last rose 2/32 in price to yield 2.3127 percent, from 2.32 percent late on Monday.

The 30-year bond <US30YT=RR> last rose 12/32 in price to yield 2.7778 percent, from 2.796 percent late on Monday.

Germany’s 10-year bond yields <DE10YT=RR> held near two-month lows at 0.338 percent after the European Central Bank firmed up its plans to reinvest the proceeds of its 2.5 trillion euro stimulus program. [GVD/EUR]

(Reporting by David Randall; Editing by Dan Grebler and James Dalgleish)

World stocks reach new peak in world full of surprises

Traders work in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, August 4, 2017.

By John Geddie

LONDON (Reuters) – World stocks breached record highs on Monday as better-than-expected company earnings and economic data from the United States stole the focus from rising geopolitical tension over North Korea’s nuclear program.

The U.S. dollar  dipped slightly but held on to most of Friday’s gains – its biggest daily rise this year – made after data showed the United States created more jobs than forecast last month.

For those watching second quarter corporate results in recent weeks, there have been many such surprises. Of the nearly 1000 companies in the MSCI world index that have reported, 67 percent have beaten expectations, according to Reuters data.

These two factors helped nudge the flagship share index above a peak breached late last month, setting a new all-time high of 480.09 on Monday.

The Dow Jones, which recorded its eighth consecutive record high on Friday, was set to open up slightly on Monday.

“Global equities remain the preferred asset class for investors and this can be clearly seen in the new highs hit by world indices today,” said Edward Park, investment director at Brooks Macdonald.

“Whilst the headline beat in non-farm payrolls was the primary positive for the market … equity prices are supported by a strong earnings season and relatively low event risk over the next few months.”

Aside from a slight weakening in the Korean won, there was little financial market reaction to the news over the weekend that the U.N. Security Council unanimously imposed new sanctions on North Korea aimed at pressuring Pyongyang to end its nuclear program.

South Korean President Moon Jae-in and his U.S. counterpart, Donald Trump, agreed in a telephone call on Monday to apply maximum pressure and sanctions on North Korea, while China expressed hope that North and South Korea could resume contact soon.

Yields on U.S. and German government bonds – seen as a safe haven in times of stress – held above one-month lows hit at the tail end of last week.



A strong rise in U.S. and Asian stocks propelled the world index to a new high, with the strength of the euro providing a bit of a headache for European markets.

Earlier in Asian trading, MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.5 percent while Japan’s Nikkei added 0.5 percent.

Chinese blue chips were bolstered by data showing the country’s foreign exchange reserves rose twice as much as expected in July.

A dramatic reduction in capital outflows – which are seen as one of China’s biggest risks – has helped boost confidence in the world’s second largest economy ahead of a key political leadership reshuffle in coming months.

The euro zone’s main stock index edged lower, however, as the single currency headed back towards 20-month high, a trend which appears to be denting profitability in certain sectors.

Of the MSCI Europe companies having reported, 61 percent have either met or beat expectations. But focusing on industrial firms – of which many depend on exports, and are sensitive to a stronger euro – the beat ratio is just 37 percent.

“The euro is likely to have an impact in the third quarter, with a 10 percent appreciation of the euro lowering earnings per share by around 5 percent,” said Valentin Bissat, senior strategist at Mirabaud Asset Management.


The upbeat U.S. jobs data offers policymakers some assurance that inflation will gradually rise to the central bank’s 2 percent target, and likely clear the way for a plan to start shrinking its massive bond portfolio later this year.

But market pricing shows investors are still about evenly divided over whether the Fed will also opt to raise rates again in December.

For some analysts, Monday’s pull back in the dollar backs some views in markets that Friday’s rally may not have legs.

The dollar index, which tracks the greenback against a basket of six global peers, inched back 0.2 percent to 93.361. It rallied 0.76 percent on Friday, its biggest one-day gain this year.

The dollar slipped 0.2 percent against the euro to $1.1796 per euro, after surging 0.8 percent on Friday.

“The most logical view here is the moves on Friday were clearly just a sizeable covering of USD shorts, from what was one of the biggest net short positions held against the USD for many years,” Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.

For the dollar rally to gain momentum, the market needs to change its interest rate pricing, Weston added.

In commodities, oil prices slid back from nine-week highs hit on Aug. 4 as worries lingered over high production from OPEC and the United States.

Global benchmark Brent crude futures were down 60 cents, or 1.14 percent, at $51.82 a barrel. They traded as low as $51.56 a barrel earlier in the day.

Gold  steadied as the dollar surrendered some of its gains, but remained under pressure. The precious metal was marginally lower at $1,257.41 an ounce, extending Friday’s 0.8 percent loss.


(Reporting by John Geddie in London and Nichola Saminather in Singapore Additional reporting by Helen Reid in London; Editing by Richard Balmforth)


Slow U.S. jobs growth takes shine off dollar, stocks hold all-time highs

A U.S. five dollar note is seen in this illustration photo June 1, 2017. REUTERS/Thomas White/Illustration

By Vikram Subhedar

LONDON (Reuters) – The dollar retreated slightly after disappointing U.S. jobs growth data on Friday though world stocks clung on to record highs, having gained 11 percent so far this year.

Nonfarm payrolls increased 138,000 last month as the manufacturing, government and retail sectors lost jobs, the Labor Department said on Friday.

While the job gains could still be sufficient for the Federal Reserve to raise interest rates this month, the modest increase could raise concerns about the economy’s health after growth slowed in the first quarter.

“This number is not the kind of report that derails the Fed from raising rates in June,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.

“We’re in a mature phase of the cycle, job growth is going to slow down. The Fed has been talking about this for over a year at this point and they are braced for that reality.”

The dollar index <.DXY>, which measures the greenback’s strength against a basket of major currencies, fell 0.3 percent.

Stock futures on Wall Street trimmed gains slightly and were last trading little changed.

Overnight, data showing a healthy uptick in private sector hiring and factory activity during May bolstered expectations that the U.S. economy was picking up speed and lifted U.S. stocks after two days of losses.

Those gains filtered through to global stocks, lifting the MSCI All-Country World index <.MIWD00000PUS> 0.4 percent to a record high and on track to post a seventh straight week of gains, the longest such run since 2010.

Stocks in Europe joined the party with German bluechips powering ahead to a record, up 1.6 percent. The UK’s FTSE 100 <.FTSE> also hovered near its highest-ever levels rose 0.4 percent.

So far this year investors have pumped $140 billion globally into stock funds, according to fund flow data from Bank of America Merrill Lynch and EPFR showed on Friday.

Global equities attracted $13.7 billion in the latest week to Wednesday, the largest inflows in five weeks, as investors loaded up on risk.

In commodities, however, oil prices resumed their slide with key futures contracts down more than 2 percent amid worries that U.S. President Donald Trump’s decision to abandon a global climate pact could spark more crude drilling in the United States, stoking a persistent glut in global supply.

Global benchmark Brent crude futures <LCOc1> fell to $49.63 a barrel, while U.S. West Texas Intermediate crude <CLc1> by more than a dollar to $47.36 per barrel.

(Reporting by Vikram Subhedar; Editing by Hugh Lawson and Keith Weir)

World stocks pause near record highs ahead of Trump landmark

People walk through the lobby of the London Stock Exchange in London, Britain August 25, 2015. REUTERS/Suzanne Plunkett/File photo

By Vikram Subhedar

LONDON (Reuters) – Concern about global trade and U.S. President Donald Trump’s “America First” policies kept appetite for risky assets in check on Friday, setting world stocks on the path to a sluggish end to what will be their sixth straight month of gains.

In an interview with Reuters, Trump called the U.S. trade pact with South Korea “unacceptable” and said it would be targeted for renegotiation after his administration completed a revamp of the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

Trump’s comments sent Seoul stocks <.KS11> and the won <KRW=> into reverse.

Global stocks <.MIWO00000PUS> were steady, however, little changed on the day and holding near all-time highs and on track for a sixth straight month of gains.

Stock futures on Wall Street <ESc1> were up 0.1 percent, also near their highest ever levels.

Saturday marks Trump’s 100th day in office and his attacks on free trade and scepticism about his administration’s ability to see through a tax and spending campaign promises has dented some of the enthusiasm in markets that followed his election win.

“Trump is reaching the 100-day mark with nothing to show for it and these recent comments just coincide with that. They (the U.S. administration) are finding it hard to push through fiscal plans and all this rhetoric is probably related,” Kiran Kowshik, strategist at Unicredit.


The mood on Europe, however, remains upbeat.

Euro zone bond yields rose across the board on Friday and the euro strengthened, rising 0.6 percent against the dollar <EUR=> to $1.0944, as output data from several countries reaffirmed a picture of economic strength in the bloc.

At the same, inflation blew past expectations to hit a three-year high, keeping pressure on the European Central Bank to start dialing back its stimulus measures.

Regional banking shares <.SX7P> added to recent gains.

Barclays <BARC.L> shares were an outlier, however, sliding 5 percent after disappointing investment banking results and weighing on the broader STOXX 600 <.STOXX> index which fell 0.2 percent.

European stocks are still up more than 2 percent on the week. Bank of America Merrill Lynch (BAML) noted that the $2.4 billion of inflows into European equity funds over the past week were the highest since December 2015.

“The hard data for equities is earnings — and they are powering ahead. Q1 earnings season is very strong and revisions trends are positive and broad-based,” said analysts at BAML, who forecast 15 percent earnings growth for European companies and a further 8 percent rally for the STOXX 600.

Healthy earnings, particularly from companies closely geared to economic growth, have underpinned the rally in global stocks, which have added nearly $5 trillion to their market value so far this year, according to Thomson Reuters data.

In commodities, oil prices rose but were still on track for a second straight weekly loss on concerns that an OPEC-led production cut had failed to significantly tighten an oversupplied market.

U.S. West Texas Intermediate (WTI) crude <CLc1> was at $49.43 per barrel at 0649 GMT, up 46 cents, or 0.94 percent, from its last close. WTI is still set for a small weekly loss and is around 8 percent below its April peak.

Brent crude <LCOc1> was at $51.91 per barrel, up 47 cents, or 0.91 percent. Brent is around 8.5 percent down from its April peak and is also on track for a second, albeit small, weekly decline.

(Additional reporting by Sujata Rao, Editing by Jeremy Gaunt and John Stonestreet)

Savaged dollar steadies ahead of Fed, stocks rise

dollar sign with other currency signs

By Marc Jones

LONDON (Reuters) – The dollar steadied on Wednesday and world stocks made their first gain in five days, having been whipped into worry by Trump administration claims that Germany, Japan and China had devalued their currencies.

The dollar <.DXY> suffered its worst January in three decades after President Donald Trump complained that every “other country lives on devaluation,” while the U.S sat by “like a bunch of dummies”.

It recovered a modest <.DXY> 0.15 percent in Asian and European trading. Bruised dollar bulls reassured themselves that the Federal Reserve should signal later that it still plans to raise U.S. interest rates a number of times this year.

Wall Street futures also pointed to a 0.3-0.6 percent bounce <ESc1> after Apple <AAPL.O> reported a strong revival in iPhone sales and healthy results from a slew of Europe’s bluechips had lifted its big bourses 1 percent.

That all combined to help MSCI’s 46-country All World index snap a four-day losing streak <.MIWD00000PUS> though the recent protectionist noises from Trump’s team kept markets jittery.

Trump’s top trade adviser had also said on Tuesday that Germany was using a “grossly undervalued” euro to exploit its trading partners. The accusations drew rebuttals from German and Japanese officials, but looked likely to run for some time.

“The issue is at what point do investors get concerned that the potential negative shock effects from trade, immigration and geopolitics overwhelm the positives (of potential U.S. stimulus),” said Bluebay asset management head of Credit Strategy David Riley.

There was little reaction to a raft of European data. Sterling <GBP=D3> nudged up after figures showed its fall since June’s Brexit vote had stoked the sharpest rise in factory costs on record a day ahead of a Bank of England inflation report.

Euro zone factories meanwhile started 2017 by ramping up activity at the fastest rate for nearly six years.

Despite that France’s government borrowing costs continued to outpace Germany’s or even Belgium’s as pressure simmered ahead of elections in April and May.

Marine Le Pen’s strongly polling National Front party said on Tuesday it would put leaving the euro at the heart of its economic platform.

“The France (bond yield) spread to Belgium is the gauge we use for political risk, and that has widened further after an adviser to Le Pen fleshed out their Frexit plans,” said ING strategist Martin van Vliet, using a term similar to the Brexit


Overnight in Asia, Japanese investors seemed relieved the yen’s rise <JPY=> against the dollar on Tuesday had not been larger. They nudged the Nikkei <.N225> up 0.6 percent and MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> up 0.1 percent in a largely quiet session.

Chinese markets were still on holiday but surveys from the Asian giant showed manufacturing and services activity continued to expand in January.

Exports from tech bellwether South Korea also grew at the fastest pace in almost five years, another sign the global economy had been on the mend before all the talk of U.S. protectionism darkened the air.

Investors’ hopes for a fiscal boost to the world’s largest economy under Trump have been tempered by controversial and protectionist policies that have seen him suspend travel to the United States from seven Muslim-majority countries.

The policy uncertainty only added to expectations the U.S. Federal Reserve will keep interest rates steady when it concludes a two-day meeting later Wednesday.

The recent retreat in the dollar also boosted a range of commodities, with copper near two-month highs as a strike also loomed the world’s biggest copper mine in Chile <CMCU3>.

Oil edged further above $55 a barrel too supported by signs that Russia and OPEC producers are delivering on promised supply reductions. Brent crude oil <LCOc1> for April added 55 cents to $56.14, while U.S. crude <CLc1> rose 47 cents to $53.29.

(Additional reporting by Wayne Cole in Sydney; Editing by Toby Chopra)

Stocks bask in Dow’s afterglow, dollar perks up

Indonesia stock market

By Marc Jones

LONDON (Reuters) – World stock markets climbed strongly on Thursday, with investors basking in the afterglow of a break past 20,000 points for Wall Street’s record high Dow Jones index.

MSCI’s 46-country All World index &lt;.MIWD00000PUS&gt; was within touching distance of its lifetime high as European stocks [.EU] rose to their highest since Dec. 2015, completing a global loop after Asia’s main bourses also saw a bumper session. [.T]

The “Trump trade”, based on hopes of U.S. stimulus reflating growth, would appear to be back on – egged on by some impressive corporate earnings, higher commodity prices and signs that growth is finally finding some traction worldwide.

The Dow’s record run looked set to continue later [.N] and the curious outlier of recent weeks, the dollar &lt;.DXY&gt;, pushed off seven-week low it had hit after Trump confirmed he was ready to start building his controversial border wall with Mexico. [FRX/]

There were no such wrinkles in bond markets. Ten-year U.S. Treasury yields &lt;US10YT=RR&gt; were back above 2.53 percent to their highest of 2017 so far and the equivalent German &lt;DE10YT=TWEB&gt; and French yields jumped to their highest levels in over a year.

“The reflation trades are being driven by two main things,” said Neil Williams, chief economist at fund manager Hermes.

“Countries more willing to open the fiscal box and we are awaiting Mr Trump’s long-awaited tax cuts in mid-year. And second is the prospect of ultra-loose monetary policy.”

In commodities, crude oil prices also bounced as global sentiment lifted and the dollar weakened, which helps non-U.S. buyers of dollar-denominated raw materials. [O/R]

U.S. crude &lt;CLc1&gt; was up 0.8 percent at $53.18 a barrel after losing the same amount the previous day. Brent added 0.8 percent to $55.53 a barrel &lt;LCOc1&gt;, while cooper hit a two-month high as a strike loomed at the world’s biggest mine in Chile.


Wall Street traders were already sifting through results from the likes of Ford &lt;F.N&gt;, Caterpillar &lt;CAT.N&gt; and Dow Chemical &lt;DOW.N&gt;. Service sector PMI numbers are also due later to provide the macro temperature of the world’s largest economy.

The Dow Index had been flirting with 20,000 points for weeks so it brought widespread cheer – and cap brandishing – when it broke through. It only topped 19,000 in November and this was the second-shortest time on record to jump 1,000 points.

SEB investment management’s global head of asset allocation Hans Peterson said he was now taking stock following the moves.

“We are neutral on the U.S. (stocks)” he said. “We think it is sort of stretched although not extremely stretched and not as far as it has been, but (U.S. Treasury) yields are going up and the dollar might be closer towards its turing point.”

Europe’s cross-country European STOXX 600 index &lt;.STOXX&gt; was trading 0.3 percent higher by 1300 GMT at its highest since December 2015. Germany’s DAX &lt;.GDAXI&gt; hit its highest since May 2015 and London’s FTSE &lt;.FTSE&gt; was near an all-time record.

Milan &lt;.FTMIB&gt; also showed little sign of nerves after Italy’s constitutional court on Wednesday opened the way for new elections this year, potentially in the summer and one which will be another populist battle.

Asian shares &lt;.MIAPJ0000PUS&gt; had a good day too. Japan’s Nikkei &lt;.N225&gt; brushed aside a stronger yen to rise 1.7 percent, Hong Kong’s Hang Seng &lt;.HSI&gt; climbed 1.3 percent and Shanghai &lt;.SSEC&gt; edged up ahead of a week-long Lunar New Year holiday.

“Today’s excitement mainly comes from strong U.S. stocks overnight, but people are also positive about Japanese companies’ earnings, especially machinery manufacturers,” said Takuya Takahashi, a strategist at Daiwa Securities in Tokyo.

Back in the currency markets, sterling hit a six-week high after solid GDP data before fizzling. The dollar index &lt;.DXY&gt;, which tracks the greenback against six other top currencies, clawed back from its overnight lows to stand flat on the day.

“The problem that the greenback is having right now is two- fold – first Trump has been talking down the currency and second, his policies make foreign investors nervous,” wrote Kathy Lien, managing director of FX strategy for BK Asset Management.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=

(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Gareth Jones)