Stocks staged a cautious fight back on Thursday before a potentially tense meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping, the first between the two world leaders.
Risk appetite stabilized, having been soured by signs the Federal Reserve might start paring asset holdings later this year and that the chances of early U.S. fiscal stimulus may be evaporating.
Wall Street’s main markets barely budged as they reopened ESc1, though there was encouragement from jobs market data as weekly jobless claims posted their largest drop in almost two years.
Europe’s big bourses .FTEU3 were also starting to turn green, having been down almost 1 percent earlier at one point and facing their worst day in over a month. [.EU]
“I would say there is a general mood of caution although it would probably be too strong to say it’s risk off,” said Societe Generale strategist Alvin Tan.
“The reality is U.S. equity markets have been going sideways for a while and Treasury yields have been trading towards the low end of the year’s range.”
In the currency markets, the dollar was idling after a brief push .DXY, leaving the drama to the Czech crown EURCZK=D3 which saw its biggest rise since 2011 as the central bank scrapped its long-held FX cap versus the euro.
Topping the agenda between Trump and Xi in Florida later will be whether Trump makes good on his threat to use U.S.-China trade ties to pressure Beijing to do more to rein in its nuclear-armed neighbor North Korea.
Nerves were not helped when U.S. Pacific Fleet Commander Admiral Scott Swift said any decision on a pre-emptive attack against North Korea would be up to Trump.
Lingering fears of a possible trade war had also kept Asian markets on edge. Hopes of near-term U.S. fiscal stimulus were also bruised as U.S. House of Representatives Speaker Paul Ryan said there was no consensus on tax reform and that it would take longer to accomplish than healthcare.
Global equity markets, dollar edge higher ahead of first meeting between Trump and China’s Xi
April 6, 2017 by Leave a Comment