Published: Sun, March 19, 2017
World | By Ernestine Jimenez

United States stocks step back while overseas markets rally

United States stocks step back while overseas markets rally

Investors lodged large bets on the dollar after Donald Trump's U.S. presidential election win previous year, expecting his mix of tax reform, capital repatriation and new public spending to raise inflation in the United States and in turn drive Fed rates higher.

Japan's Nikkei 225 is down 0.2 percent Wednesday while Germany's DAX is 0.1 percent higher.

MSCI's all-country world stock index gained 0.7 percent.

The euro was down 0.1 percent at $1.0751 After two days of gains against the dollar.

Data on Friday showed a steadily improving USA economy, with manufacturing output rising for a sixth straight month in February and preliminary consumer confidence for the month of March increasing as well.

"We are in the beginning stages of a re-normalization of interest rates", Taylor said.

The euro was also buoyed by a Dutch election defeat for far-right leader Geert Wilders which eased broader fears of a populist drift in European polls this year.

The Dow Jones Industrial Average rose 96.65 points, or 0.46 percent, to 20,934.02, the S&P 500 gained 16.79 points, or 0.71 percent, to 2,382.24 and the Nasdaq Composite added 35.65 points, or 0.61 percent, to 5,892.47. Wilders, like Marine Le Pen in France (, has expressed an interest in the Netherlands leaving the European Union, something that caused widespread volatility when the United Kingdom voted to do so in June. "I would expect gold to trade in a wide band of $1,190 - $1,230 between the French elections and US Federal Reserve meeting in May", said Jiang Shu, chief analyst at Shandong Gold Group.

US 30-year bonds fell 19/32 in price, and yields rose to 3.134 percent from 3.102 percent.

SOME CENTRAL BANKS FOLLOW THE FED: China's central bank raised a short-term interest rate on lending to banks but left its benchmark rate unchanged after the USA increase. The bank cited the Fed's rate hike and improved Chinese economic conditions. With evidence building that wages and consumer spending are finally slowing, however, money market pricing has pointed to there being little chance of the bank raising rates to cool an economy at a time when political risks to growth are rising. The Euro Stoxx 50 Index advanced 0.9%.

The April crude contract was down one cent at US$48.74 per barrel and April natural gas contracts rose four cents at US$2.94 per mmBTU.

ENERGY PAIN: The drop in oil prices resumes a slide that's been ongoing since late last month. "While the dollar sell off may last for a day or two our thinking is that buying these. dips is still a good strategy". The euro rose to $1.0733 from $1.0713, and the British pound rose to $1.2352 from $1.2301.

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