The dollar strengthened on Thursday, once again hitting the highest in almost a year, as investors continued to fret about the outlook for global trade. European equities drifted alongside U.S. futures, while emerging-market stocks slid.
The greenback advanced against almost every major peer following an increase in Treasury yields on Wednesday, though U.S. notes edged up as China reiterated threats to retaliate against proposed U.S. tariffs. Core European bonds drifted while peripherals fell led by Italian debt. The Stoxx Europe 600 Index struggled to hold gains after Daimler AG cut its profit outlook, sinking automakers. The pound weakened before a rate decision.
Shares in Asia declined as benchmarks in Hong Kong, Seoul and Shanghai all fell at least 1 percent. Stocks in the Philippines entered a bear market while Indonesia’s rupiah slumped as markets reopened after a holiday. West Texas oil slipped below $65 a barrel ahead of a crucial OPEC meeting that will decide on output.
The global market agenda continues to be dominated by trade threats and fears, which elicited warnings from major central bankers on Wednesday and are beginning to show up in the business cycle — Daimler cited escalating tension between the U.S. and China as a reason for cutting its outlook. Investors have been looking for safety as concern mounts, and with the U.S. upbeat on growth and the Fed raising rates, American assets are appealing. For many that means a shift into dollars, spurring the greenback and adding another headwind to emerging markets.
“At the moment we just want to be a little bit cautious,” Colin Graham, chief investment officer of multi-asset solutions at Eastspring Investments, said on Bloomberg Television. “Overall Goldilocks is still alive and it’s going to be fine this year — risk assets are still going to outperform safe-haven assets — but we are going to see more choppy returns.”
Elsewhere, New Zealand’s dollar fell to its weakest in six months after data showed first-quarter growth slowed, bolstering the case for the central bank to keep rates at a historic low.
Terminal users can read more in Bloomberg’s Markets Live blog.
Here are some key events to watch for this week:
- The Bank of England’s policy decision is due on Thursday.
- Also on Thursday: U.S. jobless claims.
- The Organization of Petroleum Exporting Countries meets in Vienna on Friday.
And here are the main market moves:
- The Stoxx Europe 600 Index gained less than 0.05 percent as of 9:43 a.m. London time.
- Futures on the S&P 500 Index dipped less than 0.05 percent.
- The U.K.’s FTSE 100 Index advanced 0.3 percent to the highest in a week.
- Germany’s DAX Index decreased 0.4 percent to the lowest in three weeks.
- The MSCI Emerging Market Index sank 0.8 percent to the lowest in almost nine months.
- The MSCI Asia Pacific Index sank 0.6 percent.
- The Bloomberg Dollar Spot Index advanced 0.2 percent to the highest in more than 11 months on the largest gain in a week.
- The euro fell 0.2 percent to $1.1545, the weakest in more than three weeks.
- The British pound decreased 0.3 percent to $1.3127, the weakest in about seven months.
- The Japanese yen dipped 0.1 percent to 110.50 per dollar.
- The Turkish lira sank 0.6 percent to 4.759 per dollar, the weakest on record.
- The yield on 10-year Treasuries fell two basis points to 2.92 percent.
- Germany’s 10-year yield declined one basis point to 0.37 percent, the lowest in three weeks.
- Britain’s 10-year yield increased one basis point to 1.297 percent.
- Italy’s 10-year yield gained 11 basis points to 2.662 percent, the highest in a week on the largest rise in two weeks.
- West Texas Intermediate crude declined 1.4 percent to $64.77 a barrel, the lowest in more than two weeks.
- Gold dipped 0.3 percent to $1,264.06 an ounce, hitting the weakest in six months with its fifth consecutive decline.
- Brent crude fell 2 percent to $73.27 a barrel, the lowest in seven weeks.
— With assistance by Sophie Caronello, Andreea Papuc, and Adam Haigh
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