US stocks, dollar advance as Spain woes hit Euro

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Stocks in Spain slumped and the common currency was one of the worst performers among major peers

New York: US stocks rose with the dollar, Treasuries erased losses as factory data bolstered optimism in the economy and investors assessed the prospect for tax cuts. The Euro weakened in the wake of political turmoil in Spain.

The S&P 500 Index reached record highs to start the fourth quarter, with investors also watching developments in Las Vegas, where at least 50 people have died in the deadliest shooting in modern US history. The dollar headed for the strongest level since July after data showed US manufacturing expanded at the fastest pace in 13 years. Oil fell toward $50 (Dh183) a barrel.

Stocks in Spain slumped and the common currency was one of the worst performers among major peers after a violence-marred vote in Catalonia spurred the regional government to press toward a unilateral declaration of independence. The tensions also had a clear impact in the bond market, with Spanish premiums rising as yields on comparable German debt declined.

“The critical thing for markets is the Catalan separatists have turned what was initially a very small likelihood risk of Spain’s wealthiest region decoupling, into a relatively high probability event,” Mint Partners credit analyst Bill Blain wrote in a note to clients.

Following a two-day pause the greenback is adding to gains from last week, when it benefited from speculation President Donald Trump could opt for a Fed boss who might pursue more aggressive policy tightening, not to mention details of the administration’s tax plans.

Elsewhere gold dropped and West Texas oil fell below $51 a barrel after Baker Hughes data showed the US rig count climbing to 750 last week. The pound weakened against the dollar for the sixth time in seven days amid concerns about the stability of UK Prime Minister Theresa May’s government and after data showed slowing manufacturing growth.

Meanwhile, Australia’s equity benchmark had its biggest daily gain in almost two months after China, its top trading partner, reported an unexpectedly strong manufacturing gauge and announced plans to cut the amount of cash banks must hold as reserves for certain loans. Japanese shares were mixed after the Bank of Japan’s quarterly Tankan survey showed the country’s big manufacturers are the most confident in a decade.

Holidays in markets including Hong Kong, China, India and South Korea affected the region on Monday.

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