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Category: Stockmarket / Currency / Futures / Markets

Wall Street slips as Trump share rally fades

Tuesday, 29 Nov 2016 06:03:33 | Sue Lannin

Wall Street sign with the American flag on the New York Stock Exchange behind, September 2007. (f-l-e-x: www.flickr.com)

US stocks pulled back from record highs as the post election Donald Trump rally ran out of steam.

Markets at 8:45am (AEDT):

  • ASX SPI 200 futures -0.1pc to 5,467
  • AUD: 74.72 US cents, 70.45 euro cents, 60.23 British pence, 83.73 Japanese yen, $NZ1.0570
  • US: Dow Jones -0.28pc at 19,097, S&P500 -0.53pc at 2,202, NASDAQ -0.56 pc at 5,369
  • Europe: FTSE -0.6pc at 6,799, DAX -1.09pc at 10,583, Eurostoxx -0.94pc at 324
  • Commodities: Brent oil +1.61pc at $US48.00/barrel, spot gold +0.93pc at $US1,193.56/ounce, iron ore +$US1.20 at $US80.83/tonne

Financial and consumer stocks fell back as investors took profits.

Global markets have rallied since the surprise election of Mr Trump as the next US president earlier this month, on the back of an expected increase in infrastructure spending, lower taxes and less regulation.

Yields on US Treasury bonds dropped as investors bought bonds and pushed their prices higher, considering the massive sell off of bonds to be overdone.

Major markets in Europe also slipped ahead of Italy's referendum on the weekend amid fears of more political instability on the continent.

Around eight Italian banks are at risk of failing if Italian prime minister, Matteo Renzi, loses the December 4 referendum on constitutional reform.

Adding to the gloom, European Central Bank president, Mario Draghi, warned that the United Kingdom would suffer first if Britain's decision to leave the European Union ushers in protectionist policies.

The Bank of England indicated it would look through the initial inflationary impacts of Brexit and wait to assess the overall consequences of the split from the EU.

Italian banks led the losses on European markets.

In London, the FTSE 100 lost ground, as did the CAC 40 in Paris and the DAX in Germany.

Politics driving global markets

ANZ economists noted that policymakers and politicians are driving markets globally.

"Financial markets are going to have to get used to decisions and policies taking longer to be negotiated and finalised compared with central banks," they wrote.

"A great example of this is the supposed oil production cuts from OPEC and some others, which have now been talked about for some months but have yet to materialise.

"That's just the nature of government and global policy making."

Oil prices rebounded after losing as much as 2 per cent ahead of an Organisation of the Petroleum Exporting Countries ministerial meeting on Wednesday in Vienna to discuss production cuts to curb a global supply glut.

Prices were boosted after Iraq's oil minister said the country will cooperate with OPEC to reach an agreement on supply reductions at a separate meeting overnight of OPEC experts in Vienna.

But Monday's meeting ended without agreement on concrete steps by individual countries to reduce output and oil prices eased back.

A delegation from OPEC also went to Moscow on Monday to convince Russia to join the supply reduction agreement.

Russia has so far refused to join plans for production cuts but has offered to freeze output at current levels.

Oil prices fell further on Monday after Saudi Arabia withdrew from a planned meeting in Vienna with non-OPEC producers to discuss supply cuts. That meeting was cancelled.

Chief oil analyst from Energy Aspects, Amrita Sen, told Bloomberg that oil prices could fall to the $US20s a barrel level if there is no agreement this week by OPEC to cut output.

Spot gold rose from its lowest levels since February as the greenback lost ground.

Industrial metals such as zinc surged to a nine-year high, boosted by reports of more infrastructure and property investment in China.

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