Global markets remain fragile

Equity markets across Asia were lower early Tuesday, tracking overnight declines in the U.S., as cautious investors looked ahead to elections in the U.K. and a European Central Bank meeting.

Investors are also looking for any fallout from former U.S. Federal Bureau of Investigation Director James Comey’s public testimony about alleged Russian interference in the 2016 election. Mr. Comey’s testimony is scheduled for Thursday, as are the U.K. elections and the ECB meeting.

Australia’s S&P/ASX 200 was recently down 1%, while Japan’s Nikkei Stock Average was off 0.6%. In China, the Shanghai Composite Index was flat.

“The market sentiment remains very fragile,” said Masashi Murata, a senior currency strategist at Brown Brothers Harriman. “We can’t expect the U.S. to grow at over 3% this year, at least under the Trump administration, in the middle of political scandals.”

President Donald Trump won’t block Mr. Comey from testifying before Congress. That clears the way for him to face questions about whether he felt pressured to slow or halt the FBI’s investigation.

In currencies, the U.S. dollar declined, with beneficiaries of the so-called Trump reflation trade reversing gains made since November.

The WSJ Dollar Index, a measure of the dollar against 16 other currencies, was down 0.2% at 88.16, at levels close to those on Nov. 8, before Mr. Trump’s victory sent the dollar soaring. The dollar was also down 0.2% against the euro and the pound.

“That [Comey testimony] is pretty much the focus on the greenback with a little bit of risk aversion coming into play,” says Stephen Innes, head of trading in Asia for forex broker Oanda.

The yen accelerated its gains against the dollar with the dollar-yen pair down 0.5% at Yen109.85. That weighed on the Nikkei.

In Japan, shares of heavy equipment makers–which had benefited from expectations for greater infrastructure spending in the U. S.–were down, with Komatsu 2% lower, Hitachi Construction falling 2.3% and Kubota losing 1.6%.

Meanwhile, oil prices fell in Asia after a volatile session the previous day. Though off from a one-month low, prices for Brent crude were down 0.6% at $49.17 a barrel.

Fox Business

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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