As Trump’s foreign policies wreak havoc, the results are equally mixed in the international financial market. U.S. stocks & treasuries soared while the dollar slipped. European stocks rose while the pound fell. Oil continued to rally as gold faltered on the brink of a much needed increase.
Banks in the US celebrated as Trump’s government put financial regulations in its cross-hairs. This optimism was reflected in the stock market reaching new heights. Employers hired record amounts of employees while wage growth stalled. This international tug of war has sparked worldwide uncertainty, but for now most financial institutions are on the rise.
Even Trump’s Foreign Policies Can’t Stop Rally
Amidst one of the most controversial times in the country’s history, things still look bright in the US. Employers enthusiastically increased hiring, reaching a 4-month record. Visa Inc. rallied on earnings as the Dow Jones Industrial Average hit 20,000 for the first time in a week. Lenders scrambled to trim last week’s losses, resulting in a 1.4% raise. Stocks joined the rebound as the S&P 500 soared 0.5% to 2,292.33, successfully paring a weekly slide. All these factors are paving the way for the a comeback, but it’s impossible to get too confident.
Despite all these advances, there’s still some slack in the US labor market. Amazon.com Inc. tumbled 4.1% after a foreboding forecast raised the alarm on their spending. Even after embarking on a hiring frenzy, wage growth is stagnating. This puzzling refrain from expansion has caused the dollar to slip. According to Bloomberg’s Dollar Spot Index, the greenback is set to continue its 6th weekly slide. It refused to budge even after a 0.3% raise, putting it on track for the longest slump since August 2010.
Many blame the wage rate, but the Federal Reserve is also responsible for the dollar’s demise. Since there’s still room to keep rates low, the odds for a Fed rate hike in March are becoming more unlikely by the day. This week alone the odds for a March hike fell six points, leaving it at an unlikely 26%. This growing uncertainty is blocking the dollar’s valiant attempts at a comeback.
International stocks shared a surprisingly positive reaction to the current state of political chaos. While the world condemned Trump’s controversial foreign policies, European stocks managed to make a comeback. After rising 0.7%, European stocks were able to pare their 5 day drop to 0.6%. The MSCI Emerging Market Index erased a weekly loss after rising 0.6%. These unexpected moves showcase that the world’s financial institutions are remaining defiant in the face of Trump’s bold moves.
Across the board international currencies faltered as commodities showed mixed results. The pound joined the dollar in its slide with a 0.3% drop, leaving it at $1.2493. The euro also took a hit, dropping by 0.2%. Ironically, Russia’s ruble was bolstered by 0.2% after their central bank left its key rate in place. Oil enjoyed its third weekly gain after OPEC achieved 60% of its output target cut. After teetering on the brink of a 1.7% increase, gold fell 0.3% to $1,211.70 an ounce. This surprising development was fueled by the increased demand for a haven after political risk continues to grow.
As the world reels from Trump’s bold policies, the financial markets are staying on track. Fortunately, the market is resilient enough to survive political shakeups. Even though everyone isn’t on the same page politically, international financial progress is being preserved.