Global stocks, dollar inch higher as Trump-Xi summit gets going

Caution the byword among punters to see what the summit will bring

PUBLISHED : Friday, 07 April, 2017, 7:55am
UPDATED : Friday, 07 April, 2017, 7:55am

Global equity markets and the dollar edged higher on Thursday, helped by fresh data showing a tighter US labour market, as investors stayed cautious before the first meeting between US President Donald Trump and his Chinese counterpart Xi Jinping.

Key stock indexes in Europe and on Wall Street climbed but a gauge of global equities was little changed, with gains offset by a decline in emerging markets.

The dollar index rose after data showed new applications last week for US unemployment benefits recorded their biggest drop in nearly two years.

Last week’s jobless claims data, however, has little bearing on the March employment report due out on Friday. Claims rose during the survey week for non-farm payrolls last month, suggesting some moderation in the pace of job growth.

“The market will be very remiss to do anything too sharp at this point, given that we have payrolls coming up,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.

Trump and Xi Jinping jet into Florida for first summit with North Korea on their minds

Trump faces pressure to deliver trade concessions with China for some of his most fervent supporters and to prevent a crisis with North Korea from spiralling out of control. However, White House officials have set expectations low for the meeting.

The market’s main concern is that Trump and Xi may not see eye-to-eye on most things and that traders will infer this from their body language, said Thierry Albert Wizman, global interest rates and currencies strategist, at Macquarie Group in New York.

“Rather than a lack of agreement, however, the greater risk is a lack of deep engagement,” he said.

On Wall Street, the Dow Jones Industrial Average rose 14.8 points, or 0.07 per cent, to 20,662.95. The S&P 500 gained 4.54 points, or 0.19 per cent, to 2,357.49 and the Nasdaq Composite added 14.47 points, or 0.25 per cent, to 5,878.95.

The pan-European FTSEurofirst 300 index closed up 0.16 per cent to 1,499.94, while MSCI’s gauge of stocks across the globe fell 0.07 per cent.

The dollar index rose 0.17 per cent, with the euro down 0.21 per cent to US$1.064. The Japanese yen eased 0.07 per cent versus the greenback at 110.79 per dollar.

Oil prices rose nearly 1 per cent, a fourth straight day of gains, but analysts warned record high US inventories could derail the rally.

US crude rose 55 cents to settle at US$51.70 a barrel and Brent settled up 53 cents at US$54.89.

US Energy Department data show crude inventories at record levels, leading some analysts to say speculative buying is starting to reach dangerous levels from a technical perspective.

“It’s hard to justify the move on the on back of fundamentals,” said Robert Yawger, director in energy futures at Mizuho.

US Treasury yields fell slightly ahead of the US jobs report on Friday.

Benchmark 10-year Treasury notes were last up 2/32 in price to yield 2.3480 per cent.

Gold edged lower on Thursday, pressured by a firmer dollar on the back of upbeat US unemployment data and as some investors sold to redeem profits after bullion’s recent advance.

Spot gold fell 0.2 per cent to US$1,252.34 an ounce. US gold futures settled up US$4.80 to US$1,253.30.

Copper lost 0.29 per cent to US$5,878.00 a tonne.