The dollar strengthened on Thursday, once again hitting the highest in almost a year, as investors continued to fret about the outlook for global trade. European equities drifted alongside U.S. futures, while emerging-market stocks slid.
The greenback advanced against almost every major peer following an increase in Treasury yields on Wednesday, though U.S. notes edged up as China reiterated threats to retaliate against proposed American tariffs. Core European bonds drifted while peripherals fell led by Italian debt. The Stoxx Europe 600 Index struggled to hold gains after Daimler AG cut its profit outlook, sinking automakers. The pound weakened before a rate decision.
Shares in Asia declined as benchmarks in Hong Kong, Seoul and Shanghai all fell at least 1 percent. Stocks in the Philippines entered a bear market while Indonesia’s rupiah slumped as markets reopened after a holiday. West Texas oil slipped below $65 a barrel ahead of a crucial OPEC meeting that will decide on output.
The global market agenda continues to be dominated by trade threats and fears, which elicited warnings from major central bankers on Wednesday and are beginning to show up in the business cycle -- Daimler cited escalating tension between the U.S. and China as a reason for cutting its outlook. Investors have been looking for safety as concern mounts, and with the U.S. upbeat on growth and the Fed raising rates, American assets are appealing. For many that means a shift into dollars, spurring the greenback and adding another headwind to emerging markets.
“At the moment we just want to be a little bit cautious,” Colin Graham, chief investment officer of multi-asset solutions at Eastspring Investments, said on Bloomberg Television. “Overall Goldilocks is still alive and it’s going to be fine this year -- risk assets are still going to outperform safe-haven assets -- but we are going to see more choppy returns.”
Elsewhere, New Zealand’s dollar fell to its weakest in six months after data showed first-quarter growth slowed, bolstering the case for the central bank to keep rates at a historic low. - Bloomberg -