Three big Brexit un­knowns: FT.com/video

Financial Times Middle East - - Markets & Investing -

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

Is­abel In­fantes/AFP/Getty

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