Stocks and the dollar fell and gold rose yesterday as investors looked for safety after President-elect Donald Trump said the US currency was too strong, while sterling jumped as UK Prime Minister Theresa May promised Parliament a vote on Brexit.
Wall Street opened lower, weighed down by financial and healthcare stocks, and US Treasury prices gained on concerns about Mr Trump’s protectionist trade policies. Ahead of Friday’s inauguration, investors were waiting to see if Mr Trump would follow through on pledges for tax cuts, infrastructure spending and lighter regulation.
Investors fled the dollar after Mr Trump said US companies could not compete with China “because our currency is too strong. And it’s killing us”, in remarks published on the Wall Street Journal’s website on Monday.
The dollar was down 0.8 per cent against a basket of major currencies, while the euro rose almost one per cent against the dollar.
The pound, meanwhile, rose as high as $1.2398 before paring gains. It was last up 2.6 per cent in sterling’s biggest daily rise against the dollar since October 2008 after May said Britain would leave the EU’s single market but would seek maximum access to it through a new trade agreement.
The yen hit a six-week high of 112.70 against the US currency as investors sought shelter.
Around 11.15am ET, the Dow Jones Industrial Average was down 45.53 points, or 0.23 per cent, to 19,840.2, the S&P 500 lost 5.77 points, or 0.253667 per cent, to 2,268.87 and the Nasdaq Composite dropped 27.88 points, or 0.5 per cent, to 5,546.23.
Benchmark 10-year Treasury notes were last up 17/32 in price to yield 2.32 per cent, down from 2.38 per cent late on Friday. Yields earlier fell to 2.305 per cent, the lowest since November 30.
“We’re still in the midst of the weak dollar, lower-yield trade,” said Jim Vogel, an interest rate strategist at FTN Financial in Memphis. “It seems to represent a reversal from last year, and renewed uncertainty about Brexit and US fiscal policy and the need to stay in Treasuries to diversify.”
Gold was up 1 per cent at $1,215.9 an ounce and hit its highest point since November 22. It was on track for seven consecutive days of gains.
“The precious metal is clearly the beneficiary of this risk off appetite and traders are building their hedge,” said Naeem Aslam, chief market analyst at Think Markets UK Ltd.
Britain’s FTSE 100 share index fell 0.08 per cent, extending losses as May spoke. The FTSEurofirst 300 index of major European stocks was down 0.1 per cent.
In Asia, Japan’s Nikkei closed down 1.5 per cent at its lowest in more than a month.
Oil prices were mixed after edging higher. Brent crude , the international benchmark, traded at $55.79 a barrel, while US crude was up 0.5 per cent at $52.61.