Dollar, S&P 500 Futures Slip as Trump Bets Unwind

EghtesadOnline: The dollar weakened with U.S. equity futures and Treasuries gained as disappointment after Donald Trump’s press conference caused investors to further unwind trades pegged to fiscal stimulus expectations. Oil retreated while gold advanced.

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12 January 2017

The U.S. currency slumped against most major peers and the 10-year Treasury yield touched the lowest since November as Trump’s first press conference since his election victory gave scant detail on policy. S&P 500 Index futures dropped, while a stronger yen and a selloff in drugmakers sent Japanese equities lower. Oil retreated following the biggest rally in more than a month, and gold climbed for a fourth day, Bloomberg reported.

U.S. President-elect Trump’s press conference left investors with few specifics on the timing and scope of planned policies from infrastructure spending to trade pacts. Since his victory, the dollar and global equities have rallied, while bonds sold off amid expectations growth will get a kick higher from his administration’s actions. Health-care stocks were pressured Thursday as Trump said he’d force the pharmaceutical industry to bid for government business in the world’s largest drug market.

“Markets are disappointed by a lack of detail around the much touted stimulus plans,” said Michael McCarthy, Sydney-based chief market strategist at CMC Markets Plc. “There is a growing fear that recent positive moves are based on bombast, and could unravel very quickly.”

Currencies

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell 0.3 percent as of 1:50 p.m. Tokyo time. It’s flat since the Fed’s rate decision on Dec. 14.

The yen rose 0.7 percent to 114.65 per dollar. The currency has gained more than 2 percent over the past four days.

The Korean won jumped 1.2 percent, heading for the highest close since Dec. 15.

The Aussie added 0.3 percent after climbing 1 percent Wednesday, while the kiwi increased 0.3 percent after rising 0.9 percent in the last session.

Stocks

Futures on the S&P 500 Index slid 0.3 percent. The underlying gauge increased 0.3 percent on Wednesday, staging an afternoon rally and recouping losses of as much as 0.4 percent.

The MSCI Asia Pacific Index rose 0.6 percent, with 580 shares declining and about 380 advancing.

Japan’s Topix index lost 1.1 percent. Takeda Pharmaceutical Co. traded 2.7 percent lower, Chugai Pharmaceutical Co. lost 3.4 percent and Astellas Pharma Inc. dropped 4.3 percent.

Taiwan’s Taiex index jumped 0.7 percent, poised for the highest close since June 2015.

Hong Kong’s Hang Seng Index dropped 0.3 percent, snapping a five-day rally, while the Shanghai Composite Index added 0.2 percent.

South Korea’s Kospi index was little changed, New Zealand’s S&P/NZX 50 Index fell for the first time in four days while Australia’s S&P/ASX 200 Index erased an early gain.

Bonds

The benchmark 10-year Treasury yield fell four basis points to 2.33 percent, touching the lowest level since Nov. 30.

Australian 10-year yields lost six basis points to 2.67 percent, while those in New Zealand dropped eight points to 3.10 percent.

Commodities

West Texas Intermediate crude slipped 0.2 percent to $52.15 a barrel, after climbing 2.8 percent Wednesday, rising the most since Dec. 1 after a government report showed U.S. refiners processed a record amount of crude last week.

Gold rose 0.5 percent to $1,197.30 an ounce, for a fourth day of gains to trade near the highest level since November.

Iron ore jumped 1.3 percent, extending its rally for a fourth day.

The London Metal Exchange halted trading early Thursday due to system issues, according to two brokers with knowledge of the halt. The LME system is down and electronic trading isn’t taking place, the LME brokers said.