Global stocks struggle, dollar gains
ahead of Fed decision
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[May 03, 2017]
By Patrick Graham
LONDON (Reuters) - European stock markets
retreated from 20-month highs and the dollar inched up on Wednesday as
investors pondered the chances of another rise in U.S. interest rates
next month ahead of the Federal Reserve's May statement.
Since December, the U.S. central bank has finally begun to deliver on
long-disappointed expectations of a steady rise in borrowing costs and
an increase in official rates June is now almost 60 percent priced in by
But U.S. economic numbers in the past month have been less convincing,
and the latest gains for global share prices look as much the product of
an improving recovery in Europe as the U.S.-based optimism that
dominated the end of last year.
A surprise fall in iPhone sales in the first quarter and drops in
vehicle sales for Ford <F.N> and General Motors <GM.N> added to nerves
about the durability of U.S. growth in the absence of a boost from tax
cuts or new public spending.
Falls in the price of copper, iron ore and other metals also underlined
growing nerves over China and, with oil prices stuck near recent lows,
weighed on Europe's commodity-heavy indices.
"These numbers point to U.S. consumers becoming more cautious and do
seem like a source of some of the weakness today," said Andy Sullivan, a
portfolio manager with GL Asset Management UK in London. "Autos, tech
and basic resources are leading Europe lower."
By 0845 GMT, the STOXX 600 <.STOXX> index of leading European shares was
down 0.2 percent. France's CAC 40 <.FCHI> and Germany's DAX .GDAXI fell
0.3 and 0.2 percent respectively while the resource-heavy FTSE 100
<.FTSE> dipped 0.3 percent.
After a mixed Asian session, with a number of major markets closed, the
MSCI global share index was marginally lower on the day. <.MIWD00000PUS>
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A surge in business investment and the fastest wage growth in a decade
suggest U.S. activity will regain momentum as the year progresses.
But Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui
Banking Corporation in Singapore, said the weak U.S. auto sales could
make market participants wary of actively buying the dollar against the
yen for now.
"Concerns about geopolitical risks such as North Korea had weighed on
the dollar against the yen recently ... But the focus is shifting to
whether the (strength) of U.S. economic fundamentals is for real," he
"There is more data coming up including the jobs data, so those need to
be watched closely," Okagawa said, referring to the U.S. nonfarm
payrolls report due on Friday.
The dollar index <.DXY>, which tracks the greenback against a basket of
trade-weighted peers, rose 0.1 percent to 99.055.
It gained around 0.2 percent against the yen <JPY=D4> and 0.1 percent
against the euro on the day but remained below highs hit over the past
(Additional reporting by Nichola Saminather in Singapore, editing by
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