Dollar Rises Before Trump Press Conference; Futures Flat, Turkish Lira Plunges
European and Asian shares, the dollar and crude all rose before President-elect Donald Trump’s first press conference since July at 11am on Wednesday, while S&P futures are little changed. Surging raw-materials stocks sent Asian stocks higher. Oil rebounds from the lowest level in a month.
In a session light on economic news, all eyes will be on Trump's press conference scheduled for 11 am: while Trump's election campaign calls for tax cuts and more infrastructure spending have boosted U.S. shares and the dollar, his protectionist statements and a flurry of off-the-cuff Tweets have kept many investors from adding to risky positions. Trump has vowed to label China a currency manipulator on his first day in office on Jan. 20 and has threatened to slap huge tariffs on imports from China.Paul Ryan and top members of Trump's transition team are discussing a controversial plan to tax imports. Economists have warned that protectionist measures could stifle international trade and hurt global growth. That brings Trump's press conference into sharp focus.
Ahead of this markets have been fairly reluctant to lay on any big bets this week heading into today’s main event. Indeed it’s been another fairly quiet 24 hours on the whole. Look no further than the S&P 500 which closed completely unchanged last night after wiping out some early modest gains. Sector wise gains for financials and health care stocks were balanced out by losses across energy stocks and real estate.
So with that out of the way, here are the session highlights so far:
- Dollar pushes higher ahead of Trump press conference
- Oil prices edge higher ahead of U.S. inventory data
- U.S. stock futures point to flat open on Wall Street
- Turkish lira hits fresh record lows
- Gold hits fresh 6-week high before Trump appearance
"From a currency perspective, markets will aim to get a clearer picture on trade, fiscal stimulus and the new administration’s relationship to the Fed," Morgan Stanley strategists wrote in a note to clients.
“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.”
In early trading, Europe opened lower only to post a modest rebound, as the Stoxx Europe 600 Index added 0.2% while after sliding -0.3%, while the U.K.’s FTSE 100 Index rose 0.1 percent as a result of the latest drop in sterling, climbing for a 12th day. If the move holds, it would be the gauge’s longest rising streak on record. The pound briefly 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.
As sterling fell, the dollar rose, and the Bloomberg Dollar Spot Index gained 0.2 percent as of 11:00 a.m. in London.
In other notable currency moves, the plunge in Turkey’s lira continued again this morning, tumbling nearly 2% against the dollar to new all time lows after data showed a worsening in the country’s current account deficit and investors took no comfort in the central bank’s latest move to shore up the currency. The lira traded at an all-time low of TRY3.8925 against the dollar after November’s current account figures showed a $590m deterioration in the deficit as the FT notes, heaping further pressure on a slowing economy suffering from sharp drops in tourist revenue. Today’s renewed lira selling follows the central bank’s attempt to put a floor on the currency by freeing up liquidity in the foreign exchange market. However, as we expected, yesterday’s announcement to tweak banks’ FX reserve requirements has done nothing stop investors dumping the currency.
S&P 500 Index futures edged higher, reversing declines over the week’s first two days.
Commodities rebounded despite the dollar strength, with West Texas Intermediate rebounding from its lowest level in a month, up 0.9% 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.