As Gold Rises, Stocks and the Dollar Decline due to Fed Concerns – Europe Market Wrap
Stock futures and the currency sank as investors reduced their exposure to US assets following the Trump administration’s greatly increased attack on the Fed. Longer-dated yields rose, while gold reached a new high.
S&P 500 contracts fell 0.6% after Fed’s Powell said that the Fed had received grand jury subpoenas for improvements to its headquarters. Powell attributed the action to officials’ reluctance to follow the White House’s interest rate preferences. Nasdaq 100 futures fell 0.9%.
The Dollar fell to its lowest point since the start of the Christmas holiday. Longer-term notes weakened on concerns that overly lenient policy may spark inflation, with the 30-year rate jumping 4 bps to 4.86%. Gold surged by up to 2%, and the Swiss Franc outperformed as investors sought safe havens. Silver rose beyond $80 per ounce.
Banks and other financial services industries with a high reliance on credit card revenue plummeted following Trump’s attempt to freeze interest rates for a year.
Oil prices remained at a one-month high as turmoil in Iran raised the prospect of supply interruptions from OPEC’s fourth-largest supplier. Brent traded above $63 per barrel after rising over 6% on Thursday and Friday, while West Texas Intermediate was above $58.
