Markets Right Now: Tech losses weigh on USA stock indexes

January 25 05:06 2018

The catalyst was a rout in the US dollar spurred by comments from Treasury Secretary Mnuchin that he wasn’t concerned about the current level of the greenback and that a weaker currency was good for trade.

The Singapore dollar surged to its highest in three years against the US dollar on Thursday (Jan 25), after US Treasury Secretary Steven Mnuchin said he would welcome a weaker greenback.

Mnuchin also spoke in favor of a strong dollar.

The risk of a weaker dollar is that it could undermine confidence in a wide swath of US assets, including the US Treasury market, it added.

US multinational companies had blamed the dollar’s strength for crimping profits in 2016; the weaker dollar is one reason many of them have since shown record profits.

The Standard & Poor’s 500 index lost 1 point to 2,837 as of 2:05 p.m.

Our objective is to be here to interact with important counterparts, ‘ Mnuchin told reporters Wednesday in advance of Trump’s arrival, after a number of world leaders raised concerns about what they term growing USA protectionism.

US Commerce Secretary Wilbur Ross defended those tariffs and warned Washington would be prepared to fight back in future against countries it felt had flouted the rules. Many other industrialized countries are seeing improvements in their economies and are able to compete against the US for investors’ money.

The tariffs, of up to 50%, prompted an outcry from China and South Korea, the primary targets of the measure.

“The U.S.at this point is in a relatively combative mode on trade arrangements”, UBS Group AG Chairman Axel Weber told Bloomberg Television in Davos on Wednesday. That’s the message that’s also coming out of the White House, which sought to assert its control over USA currency policy following Mnuchin’s initial remarks amid a day of oscillating messages that spanned two continents.

ANALYST’S VIEWPOINT: “The overnight focus had all been on the USA dollar with another jab sending the currency weaker against major currencies”, Jingyi Pan of IG said in a commentary. Japanese stocks underperformed, however, as the yen strengthened against the dollar and the tech sector underperformed. GE on Wednesday forecast more weakness this year at its power business, which produced 60 percent of company profits as recently as 2016. Decliners outpaced advancers by a 1.2-to-1 ratio.

‘The strength of the dollar is a little bit like the strength of the stock market, ‘ he previous year.

In late trading, USA 10-year Treasury yields rose to 2.652 percent, from 2.622 percent late on Tuesday.

SPIN CYCLE: Appliance maker Whirlpool, which gets most of its revenue overseas, continued to rally as the weaker dollar could boost its sales and aid its earnings.

COMMODITIES: Benchmark U.S. crude rose 80 cents, or 1.2 percent, to $65.27 a barrel in NY.

The dollar dipped slightly after his comments and hit a session low, with the dollar index slipping 0.47 percent for the day.

Among oil stocks, Oil Search is rising 0.6 percent, Woodside Petroleum is advancing 0.5 percent and Santos is up 0.3 percent after crude oil prices extended three-year highs overnight.

A man is seen behind an electronic board displaying the Nikkei average after the ceremony which kicks off the first day of trading in 2018

Markets Right Now: Tech losses weigh on USA stock indexes
 
 
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