Global stocks gain as political tumult eases

The US dollar fell while world stock markets edged up yesterday amid some calm following declines earlier in the week spurred by uncertainty relating to Donald Trump’s US presidency.

On Wall Street, key stock indexes climbed, led by energy shares. The S&P energy index was up 1.1 per cent along with a jump in oil prices.

The US dollar slipped 0.7 per cent yesterday and was down about two per cent for the week, its worst week since April 2016. Besides worries surrounding Mr Trump, the US currency has suffered from a resurgent euro, which has gained more than two per cent this week.

It has been the most eventful week of the year so far for investors, with leading world equity markets scaling record highs and then plunging in one of the sharpest cross-asset routs in years.

Triggering the move was uproar over Mr Trump’s firing of FBI director James Comey and allegations he pressed Mr Comey to stop investigating his former national security chief and other officials’ alleged ties with Russia.

There was also been worry that any political damage could hamper Mr Trump’s chances of getting his promised fiscal stimulus – which has spurred markets higher since November – through Congress.

The Dow Jones Industrial Average was up 115.62 points, or 0.56 per cent, AT 20,778.64, the S&P 500 gained 17.23 points, or 0.73 per cent, to 2,382.95 and the Nasdaq Composite added 42.85 points, or 0.71 per cent, to 6,097.98.

MSCI’s gauge of stocks across the globe rose 0.8 per cent, while European shares climbed 0.5 per cent.

The US yield curve slumped during the week to levels not seen since Mr Trump’s election, and the probability given by markets of the Fed raising rates next month has tumbled to below 60 per cent from over 90 per cent last week.

US Treasury yields rose slightly yesterday as stocks recovered, but yields stayed near one-month lows.

Emerging markets have been grappling with an unfolding corruption scandal in Brazil that threatens to engulf its president, Michel Temer.

After cratering on Thursday amid allegations Mr Temer approved hush-money payment to the jailed former house speaker, Brazilian markets recovered yesterday.

In commodities, safe-haven gold was on track for its best week in five as the dollar softened. Spot gold was up 0.5 per cent at $1,253.31 per ounce at one point, putting it up 1.9 per cent for the week.

Oil prices were heading for a second week of gains. Expectations increased that big crude exporters will extend output cuts to curb an inventory glut.

Brent crude was up two per cent at $53.58, while US benchmark crude oil surged two per cent to $50.34.


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