BLBG: Dollar Gains Before Trump as Oil Rises on OPEC Cut: Markets Wrap
Oil recovers from lowest level in a month; lira extends slump
Pound dogged by political risk before May, Carney speak
The dollar strengthened and Treasuries edged lower as investors awaited President-elect Donald Trump’s first press conference since July. Oil climbed from the lowest level in a month.
Trump’s impending address is helping boost bets on U.S. economic growth that have already sent the dollar to the highest in the past month. The three worst-performing major currencies of 2017 -- the pound, Mexican peso and Turkish lira -- extended their slide and the yen snapped a two-day advance. Oil rose as investors weighed production cuts from OPEC members against a projected gain in U.S. crude output. European stocks gained.
Trump’s election sparked euphoria across global markets amid bets his policies would boost growth and inflation, and investors will today seek details of his agenda and assess his prospects for success. Political risk weighed on the pound, meanwhile, which dropped to its weakest since October ahead of Theresa May’s first Prime Minister’s Questions of 2017 and Bank of England Governor Mark Carney’s appearance before lawmakers.
“There’s quite a lot of positioning that Trump delivers at least part of the stimulus he promises,” said Christopher Jeffery, asset allocation strategist at Legal & General Investment Management in London, who has recently adopted neutral weighting on the dollar from a more-bullish stance. “We worry that positioning has become stretched and that he doesn’t deliver.”
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Currencies
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, gained 0.2 percent as of 10:58 a.m. in London.
Turkey’s lira slumped 1.7 percent, retreating for a fifth day as investors awaited signs the central bank will support the currency.
The pound dropped below $1.21 for the first time since October, even as reports show industrial and manufacturing production grew at a faster pace than analysts forecasts.
Stocks
The Stoxx Europe 600 Index added 0.2 percent while the U.K.’s FTSE 100 Index rose 0.1 percent, climbing for a 12th day. If the move holds, it would be the gauge’s longest rising streak on record.
S&P 500 Index futures edged higher, reversing declines over the week’s first two days.
Commodities
West Texas Intermediate crude advanced 0.9 percent to $52.16 a barrel.
Iron ore futures jumped 3 percent in China after a 5.5 percent rally on Tuesday. Gold was little changed. Uranium surged the most in more than three weeks as Kazakhstan said it will reduce production by 10 percent this year after prices slumped in 2016 amid a global inventory glut.
Copper held near the highest closing price in nearly a month on the outlook for tighter supply following Indonesia’s signing of new mineral export regulations and miners’ wage negotiations in Chile.
U.S. natural gas fell 1.8 percent, paring its biggest gain in three weeks following forecasts of below-average temperatures.
