Wall Street stocks fell nearly one per cent and the US dollar dropped to a five-week low yesterday after President-elect Donald Trump’s eagerly awaited news briefing the previous day ignored his fiscal policies, which are expected to boost the economy.
Investors were hoping for commentary on the new administration’s plans for fiscal stimulus and tax cuts. Instead, Mr Trump remarked on a broad range of topics such as the Mexican wall, allegations of Russian hacking and his business interests but left out what investors wanted to hear about – fiscal spending.
In late morning trading, the Dow Jones Industrial Average was down 157.13 points, or 0.79 per cent, at 19,797.15, the S&P 500 fell 16.5 points, or 0.725173 per cent, to 2,258.82 and the Nasdaq Composite lost 53.70 points, or 0.97 per cent, to 5,509.95.
The dollar, meanwhile, hit a five-week trough against a basket of major currencies and was on track for its worst week since November. The dollar index, which measures the greenback against six major currencies, last traded down 0.7 per cent at 101.04. The dollar slid to a five-week low versus the yen and last traded down 1.3 per cent at 113.91 yen.
Mr Trump did not mention tariffs against Chinese exports, a relief for Asian markets fearing the outbreak of a global trade war. But there was more pain for the dollar as the euro drove higher on ECB minutes showing a split over stimulus.
The President-elect’s lack of policy detail also put safety plays such as bonds and gold back in favour. and the retreating dollar brought relief for Brexit-bruised sterling and Turkey’s lira. Benchmark US Treasury 10-year note prices rose 13/32, with the 10-year note yield down at 2.321 per cent. German 10-year yields, however, rose to 0.313 per cent .
European shares also fell, bucking gains in Asia overnight and weighed down by a two per cent slump in healthcare stocks after Mr Trump had said pharmaceutical firms had been “getting away with murder” with their prices.
In commodity markets, oil was higher, bolstered by news that Saudi Arabia has cut oil output to its lowest in almost two years, according to its energy minister. The world’s largest oil exporter leads Opec’s drive to eradicate a global glut and prop up prices.
US crude was trading up 1.4 per cent at $52.97 and Brent crude was up 88 cents at $55.98 a barrel, following gains of nearly three per cent on Wednesday.
The weaker dollar also helped metals markets. Gold rose to a seven-week high just shy of $1,200 per ounce while London copper traded up almost two per cent after electronic trading there was delayed by a five-hour outage.
The recently weak Chinese yuan also firmed 0.6 per cent.
Asset management giant PIMCO said yesterday it thought there was a chance Beijing could fully float the yuan this year.