Gold and silver joined the other precious metals by falling into negative territory when markets opened in New York. A firmer dollar helped push gold prices lower, shedding about $5 per ounce to trade just above $1,230/oz. Spot silver only lost 2¢ (-0.11%), holding near $17.70/oz. Platinum and palladium each lost about 0.6% in early trading.
The greenback has reversed directions from its recent string of losses last week. The drop in the dollar was prompted in part by President Trump’s comments that the USD was overvalued. While it’s true that a cheaper dollar helps boost U.S. exports, it doesn’t seem that the White House will be able to dictate its monetary policy preferences through the media. The DXY index rose by 0.6% by 10 am EST, registering above 100.5. The USD gained by about this same margin against the pound sterling, the euro, and the yen.
Nonetheless, President Trump’s first two weeks in office appear to be shaking up fund managers and Wall St bankers. They were expecting him to address bank deregulation and corporate tax breaks to start off his administration. Instead, he has focused on immigration (both illegal and legal) and renegotiating trade deals. This is a case of the stock market believing in what they were hoping Trump would do, as opposed to what he said his focus would be.
This has left equity markets dependent on earnings reports to chart a direction. It has been a mixed bag so far, leading to some traders taking profits. The Dow Jones Industrial Average lost 38 points Monday, but was able to hold on to the 20,000 level. The Dow closed at 20,033. The broader markets were also lethargic. The S&P 500 slipped 7 points (-0.3%) to end at 2,289. Tech stocks also slipped, perhaps on news that 97 tech companies signed an open letter to Trump, disagreeing with his immigration policies. The Nasdaq finished 10 points (-0.2%) lower, at 5,656. All three U.S. stock indices opened solidly in the green this morning.
In other economic news, the U.S. trade deficit narrowed in December. However, the shortfall was still more than $500 billion, the largest annual trade deficit since 2012.
Markets in Europe are once again nervous over political battles on the continent, particularly in France. The second-largest economy in Europe holds its presidential election in coming weeks, and nobody is dismissing the chances of right-wing candidate Marine Le Pen and her party, the National Front. Interestingly, markets in Europe are trading on French election news much as was the case in the U.S. this fall. Aside from the drop in the euro, the composite EURO STOXX 50 index was about 0.3% higher, London’s benchmark FTSE 100 added 0.67%, while France’s CAC 40 was just below unchanged.
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