Global stock markets and US dollar retreat before key Trump speech to Congress tonight
NEW YORK (Reuters) – World stock markets and the US dollar fell on Monday while US Treasury yields rose amid investor caution ahead of a key speech by US President Donald Trump.
The dollar fell ahead of Trump’s State of the Union address, during which he is expected to unveil details on pro-growth policies including infrastructure spending.
“There is setting up for what people expect might be at least a focus on things like fiscal stimulus and infrastructure spending of some kind that might actually boost risk and cause yields to rise,” said Aaron Kohli, an interest-rate strategist at BMO Capital Markets in New York.
US 10-year Treasury notes were last down 7/32 in price to yield 2.342%, from a yield of 2.317% late Friday. Two-year notes were last down 1/32 in price to yield 1.169%, from a yield of 1.145% late Friday.
The dollar was down 0.3% against a basket of major currencies after Trump said Monday that tax-reform details would not be revealed until after the administration’s proposal on health care.
Investors had hoped for “more clarity around tax reform sooner rather than later,” said Bipan Rai, senior macroeconomic strategist at CIBC Capital Markets in Toronto.
At 11:25 a.m. in New York, the Dow Jones Industrial Average was down 5.62 points, or 0.03%, to 20,816.14, the S&P 500 shed 0.2 points, or 0.01%, to 2,367.14, while the Nasdaq Composite added 1.63 points, or 0.03%, to 5,846.93.
Europe’s benchmark index of leading 300 shares fell 0.1%.
MSCI’s benchmark world stock index slipped 0.03% after it hit a record high last Thursday.
A proposed €29 billion merger between the London Stock Exchange and Deutsche Boerse to create Europe’s biggest stock exchange looked dead in the water due to an inability to meet European antitrust demands. Shares in both companies fell. The London Stock Exchange fell as much as 3%, while Deutsche Boerse fell as much as 4%.
“The regulatory hurdles were always a risk, and with Brexit, there are additional hurdles to clear that seem close to insurmountable now,” ETX Capital senior market analyst Neil Wilson said.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.24%, while Japan’s Nikkei fell 0.9% for its lowest close since February 9 on concerns that a stronger yen would crimp corporate earnings.
The Dow scaled its 11th consecutive record high on Friday, the longest such run since 1987, leading some to suggest it could be ready for a correction.
In Europe, the focus was on France, where the latest polls showed that centrist Emmanuel Macron would score a more convincing victory over far-right and anti-euro Marine Le Pen in the presidential election’s runoff vote.
France’s 10-year bond yield fell to a one-month low of 0.88%
In commodities, Brent crude was up 0.3% at $56.14 per barrel, and US West Texas Intermediate was up 0.4% at $54.20 per barrel, as a global supply glut appeared to ease.