Post-Election Winners and USD Lose Ground as Investor Concern Abounds
US stocks fell again today with financials, transports and other big post-election gainers losing ground while the dollar took a tumble as earnings season kicks into gear.
Tuesday, January 17, 2017 - 00:00
Politics dominated global markets as the dollar weakened after the president-elect called the US currency “too strong” and the pound rallied on British Prime Minister Theresa May’s plans to leave the European Union. The greenback fell against most peers after Donald Trump told the Wall Street Journal its value is too high in part because China holds down its own currency. Meanwhile, in Davos, Switzerland, Chinese President Xi Jinping warned about how a trade war benefits no one and would hurt the global economy. Sterling headed for its biggest gain against the dollar since the global financial crisis
The Dow Jones Industrial Average fell 58.96 points, or 0.3% to 19,826.77, the S&P 500 lost 6.8 points, or 0.30%, to 2,267.84 and the Nasdaq Composite dropped 35.39 points, or 0.63%, to 5,538.73.
There is seemingly no end in sight to the impact of Brexit and Trump, twin interrelated themes which have dominated markets both this year and last. Traders are puzzling over the meaning of the president-elect’s comment ahead of his inauguration Friday, while May’s confirmation that parliament will get a vote on the final Brexit deal added to the pound’s momentum against the greenback.
Chinese President Xi Jinping cautioned against protectionism as he pushed back against criticism of globalization by Donald Trump and other Western populists.“Protectionism is like locking yourself in a dark room, which would seem to escape wind and rain, but also block out the sunshine,” Xi told the World Economic Forum, the first Chinese head of state to address the annual gathering in the Alpine resort town of Davos. “No one is a winner in a trade war.”
Xi used his speech to support a global economic order that has helped fuel China’s almost four-decade economic boom. While a surge in global protectionist sentiment threatens to slow the engine of China’s growth, it also offers Xi a chance to advance his goal of shaping global economic systems. In his speech he did not refer to Trump by name.
The pound surged 2.9 percent to $1.2395, while the yen traded at 112.95 per dollar, up 1.1%. The currency has strengthened 3.55 over the last seven sessions.
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