Wednesday 08.05 GMT
What you need to know
- Pound holds $1.40 and euro trades around 4-year high as dollar wilts
- Dollar index dips touches new three-year low below 90 points
- With attention on the weaker dollar, stocks bull takes a breather
- European bourses slip after lacklustre showing in Asia
“The US dollar’s weakness threatens to complicate monetary policy given the tightening implied by currencies appreciating against it,” says Neil MacKinnon at VTB Capital
“US trade policy and political dysfunctionality in Washington seem to be the main culprits.”
The bull run on world stock markets is cooling as attention turns a rout for the dollar, with the index tracking the currency at renewed three-year lows.
As investors recalibrate their expectations for monetary policy tightening from central banks ahead of a meeting this week of the ECB’s governing council, the euro is up a further 0.2 per cent at $1.2319, taking its rise for the month close to 3 per cent.
Sterling is moving further above the $1.40-level which it reclaimed during the previous session for the first time since the aftermath of the UK’s Brexit vote. The pound is up 0.2 per cent at $1.4034.
The dollar index, which tracks the US currency against a basket of major peers, dropped 0.2 per cent to 89.914, below the 90 mark for the first time since late 2014.
The Europe-wide Stoxx 600, London’s FTSE 100 and Frankfurt’s Xetra Dax 30 are all flat in opening trade.
Japan’s yen is 0.4 per cent firmer at ¥109.88 per dollar and marking its first time back below the ¥110 mark in almost five months.
China’s renminbi passed the Rmb6.4 per dollar mark, with the onshore exchange rate strengthening 0.2 per cent to Rmb6.389. The less tightly managed offshore rate was 0.1 per cent firmer at Rmb6.3912.
There was a mixed showing in Asia despite a positive lead-in from Wall Street. US stocks had been buoyed by strong results from Netflix and others, which pushed the S&P 500 up to another record-high close, overcoming early nerves over new tariffs on some white goods and solar panels.
Sydney’s S&P/ASX 200 index climbed 0.3 per cent as financials gained 0.5 per cent, while the energy and information technology segments both rose 1 per cent. Rio Tinto fell as much as 1.1 per cent after the US Securities and Exchange Commission rejected the mining group’s request to drop a civil lawsuit alleging it concealed the falling value of coal assets.
In Tokyo the Topix was down 0.6 per cent as financials dropped 1.5 per cent and information technology stocks fell 1.3 per cent.
Tech stocks were also down 0.6 per cent in Hong Kong, where the benchmark Hang Seng index was off 0.2 per cent. Financial stocks also fell 0.5 per cent, while real estate stocks dropped 0.7 per cent, threatening to snap a six-day winning streak after a record high close on Tuesday.
Sovereign bond markets are relatively calm, with yields, which move inversely to prices, on 10-year US Treasuries up 1 basis point at 2.619 per cent. Yields on 10-year German debt are up 1.1bp at 0.572 per cent.
Oil prices are edging down, with Brent crude, the international benchmark, down 0.2 per cent at $69.79 a barrel. US marker West Texas Intermediate is flat at 0.1 per cent at $64.46.
Gold is up 0.3 per cent at $1,344.75 an ounce.
For market updates and comment follow us on Twitter @FTMarkets