Global stocks waver on Trump agenda concerns as dollar gains
NEW YORK (Reuters) – A gauge of global equity markets was little changed on Thursday amid investor worries over US government funding. But the US dollar rebounded after recent weakness as central bankers convened for an annual policy summit at Jackson Hole in Wyoming.
Yields on US Treasury debt rose in light trading as investors waited for speeches scheduled for Friday by Federal Reserve Chairwoman Janet Yellen and European Central Bank President Mario Draghi.
The annual central bankers’ retreat comes amid fresh indications of global growth, with copper rising to a nearly threeyear high on signs of stronger demand in top consumer China as inventories fell in London warehouses.
US equities fell amid concerns over President Donald Trump’s ability to usher legislation through Congress, said Rick Meckler, president of LibertyView Capital Management LLC, a hedge fund in Jersey City, New Jersey.
“Investors are reluctant to get too far out on their skis in terms of buying stocks,” he said. “Rallies are not extending the way they had when people had more confidence that the Trump agenda, particularly tax cuts, would be passed.”
In a post on Twitter, Trump said Congress could have avoided a legislative “mess” if they had heeded his advice on raising the amount of money the government can borrow, known as the debt ceiling.
A late-September deadline looms for US officials to raise the debt ceiling or risk defaulting on debt payments, leading investors to anticipate a volatile month, said Michael Purves, chief global strategist and head of equity derivatives research at Weeden & Co. in Greenwich, Connecticut.
“Why would you rush to buy this dip with the debt ceiling looming?” he said.
MSCI’s broad index of world stock markets was little changed, shedding just 0.02%, but the FTSEurofirst 300 index of leading regional shares in Europe closed 0.33% higher.
In early afternoon trading, the Dow Jones Industrial Average fell 13.12 points, or 0.06%, to 21,798.97, the S&P 500 lost 3.69 points, or 0.15%, to 2,440.35, and the Nasdaq Composite dropped 19.70 points, or 0.31%, to 6,258.71.
The dollar rebounded, helped by better-than-expected US initial jobless claims, which rose 2,000 to a seasonally adjusted 234,000 for the week ended August 19.
The greenback has dropped 14% against the euro this year, driven by dashed expectations for tax cuts and other progrowth plans by the Trump administration, which has weakened the case for further pro-dollar rises in US interest rates.
The dollar index rose 0.11%, while the euro fell 0.03% to $1.1802, and the Japanese yen eased 0.25% versus the greenback to 109.32 per dollar.
German bond yields were pinned near eight-week lows. Demand for the country’s top-rated debt was supported by expectations for a cautious message from the Jackson Hole summit as well as Trump’s threat on Tuesday to shut down the US government if Congress failed to secure funding for his long-promised wall along the US border with Mexico.
German 10-year bond yields were a tad higher at 0.38%, having briefly touched a fresh eight-week low of 0.37%.
Benchmark 10-year notes last fell 4/32 in price to yield 2.1851%, from 2.171% late on Wednesday.