Three big Brexit unknowns: FT.com/video
Wall Street struggled for direction and the dollar spent most of the day with a weaker bias as participants adopted a cautious stance following the weekend G20 meeting and awaited a heavy schedule of “Fedspeak” in coming days.
The hesitant tone displayed by US equities helped encourage a firmer showing for Treasury bonds while oil prices remained under pressure but gold hit a two-week high.
In early afternoon trade in New York, the S&P 500 equity index was down 0.1 per cent to 2,375, although Apple’s 1.1 per cent rise to a record high helped drive the technology-heavy Nasdaq Compositetoanall-timeintradaypeak.
The mood in Europe was downbeat, with the pan-regional Stoxx 600 index falling 0.2 per cent from Friday’s 15month closing high.
The Xetra Dax in Frankfurt shed 0.4 per cent as Deutsche Bank tumbled 3.7 percentaheadofan€8bncashcall.
Energy stocks fell on both sides of the Atlantic as concerns about US crude inventories continued to weigh on oil prices. Brent was down 0.1 per cent at $51.73 a barrel but off a three-month intradaylowof$50.25strucklastweek.
Meanwhile, the dollar had a choppy session, with the dollar index — a measure of the currency against a basket of peers — touching 100.02, the lowest for nearly six weeks, before rallying to 100.34,slightlyhigherontheday.
The euro was up marginally at $1.0739 while the US unit was down 0.1 per cent versus the yen at ¥112.64.
The meeting of G20 finance ministers in Germany concluded with a communiqué that was notable in that the commitment to eschew trade protectionism had been dropped — a clear reflection of theTrumpadministration’sstance.
“From an FX perspective, at the margin it may strengthen the expectations that the US will move toward a ‘border adjustment tax’ that would certainly have a positive impact on the dollar,” said Derek Halpenny, currency analyst at MUFG.
“However, it may also merely mean the US will implement specific tariffs on a very small number of countries that are deemed to be breaking trade rules. Or finally it might mean that the US continues to use the threat of tariffs to strengthen its negotiation power ahead of bilateral trade negotiations the US intends to conduct with countries like Mexico, Canada and China.”
JimReid,macrostrategistatDeutsche Bank, highlighted that it was still early daysfortheTrumpadministration.
“So for now, it seems that markets will wait and see before becoming too scared by the implications,” he said.
“Indeed the more significant meeting may be the G20 meeting in Hamburg in July, by which time some of that uncertainty around the new US administrationmayhavestartedtoclearup.”
The dollar has been under pressure for the past few days after the Federal Reserve raised interest rates, as