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CNBC
2 days ago
- Business
- CNBC
Dollar hits 2025 low, Middle East tensions fuel risk-off mood
The dollar hit a new 2025 low on Thursday, while stocks eased from record highs, as a cocktail of rising Middle East tensions and concern over the fragility of a trade truce between Washington and Beijing drew investors into safe-haven assets. Separately, a report on U.S. consumer inflation on Wednesday showed overall price pressures remained contained in May, largely due to declines in the cost of gasoline, cars and housing. But most economists expect inflation to pick up as the impact of U.S. tariffs begins to bite. The dollar, which has lost around 10% in value against a basket of currencies this year, fell to its lowest since April 2022 in European trading. Global stocks took a breather from the almost-unbroken rally that has run since early April, leaving the MSCI All-Country World index flat, just below Wednesday's all-time high. In Europe, the STOXX 600 fell 0.8%, led mostly by airlines, given brewing tensions in the Middle East and a deadly crash of an Air India flight bound for London that killed at least 30 people near the Indian city of Ahmedabad. The U.S. administration on Wednesday said U.S. personnel were being moved out of the Middle East due to heightened security risks in the region, which briefly drove oil prices up by 4% before they receded. "(A flare-up in tensions) is a significant tail risk, but I don't think it is anybody's baseline forecasts. So it's something to watch if there is a real escalation there, then markets will take fright and that would have ramifications for the oil price," Daiwa Capital economist Chris Scicluna said. Iran, for its part, said it will not abandon its right to uranium enrichment, a senior Iranian official told Reuters on Thursday, adding that a "friendly" regional country had alerted Tehran over a potential military strike by Israel. Classic safe-haven assets got a lift. The Swiss franc and the Japanese yen strengthened, pushing the dollar down by 1% against the franc and down 0.7% against the yen, while gold rose nearly 1% to $3,385 an ounce. The sense of relief stemming from a positive conclusion to U.S.-China trade talks earlier this week, which President Donald Trump said was a "great deal with China", evaporated by Thursday. Adding yet another dose of uncertainty in the markets, Trump said the U.S. would send out letters in one to two weeks outlining the terms of trade deals to dozens of other countries, which they could embrace or reject. "Markets may have no choice but to respond to Trump's tariff threat — even if it's just posturing to bring others to the table. The gap between 'risk-on' positioning and real-world risks has stretched too far," said Charu Chanana, chief investment strategist at Saxobank. Trump's erratic tariff policies have roiled global markets this year, prompting hordes of investors to exit U.S. assets, especially the dollar, as they worried about rising prices and slowing economic growth. The euro rose by as much as 1.07% to $1.16, its highest since October 2021. U.S. Treasuries also rallied in price, pushing yields down 3.5 basis points to below 4.38%, while two-year yields , which are more sensitive to inflation and interest-rate expectations, eased 2.7 bps to 3.92%. Later in the day, the focus will be on a producer inflation report as some of the components feed into the Fed's preferred inflation gauge - the Personal Consumption Expenditure Index. Wednesday's consumer inflation index kept alive the prospect of the Federal Reserve cutting rates by a quarter point, but only in September, as policymakers assess how tariffs work their way through the real economy. "I suspect it's probably going to be a combination of the two. Therefore it makes sense for the Fed to wait and see what happens rather than rushing into a rate cut," AMP Capital's head of investment strategy and chief economist Shane Oliver said. Oil, which has fallen by 20% in the last year, eased by 1.6% to $68.63 a barrel, but was still pinned near two-month highs, adding another moving part to the outlook for interest rates.
The Advertiser
2 days ago
- Business
- The Advertiser
Dollar skims low, MidEast tensions fuel risk-off mood
The dollar has neared a 2025 low while stocks eased from record highs, as a cocktail of rising Middle East tensions and concern over the fragility of a trade truce between Washington and Beijing drew investors into safe-haven assets. Separately, a report on US consumer inflation on Wednesday showed overall price pressures remained contained in May, largely due to declines in the cost of gasoline, cars and housing. But most economists expect inflation to pick up as the impact of US tariffs begins to bite. The dollar, which has lost around 10 per cent in value against a basket of currencies this year, skimmed its lowest levels since late April, which in turn, marked its lowest level in three years. Global stocks took a breather on Thursday from the almost-unbroken rally that has run since early April, leaving the MSCI All-Country World index down 0.1 per cent, just below Wednesday's all-time high. In Europe, the STOXX 600 fell 0.8 per cent, led mostly by airlines and autos, given the strength in the oil price, while futures on the S&P 500 and Nasdaq fell 0.5 per cent. The US administration on Wednesday said US personnel were being moved out of the Middle East due to heightened security risks in the region, which briefly drove oil prices up by four per cent before they receded. "(A flare-up in tensions) is a significant tail risk, but I don't think it is anybody's baseline forecasts. So it's something to watch if there is a real escalation there, then markets will take fright and that would have ramifications for the oil price," Daiwa Capital economist Chris Scicluna said. Iran, for its part, said it will not abandon its right to uranium enrichment, a senior Iranian official told Reuters on Thursday, adding that a "friendly" regional country had alerted Tehran over a potential military strike by Israel. Classic safe-haven assets got a lift. The Swiss franc and the Japanese yen strengthened, pushing the dollar down by around 0.6 per cent against both currencies, while gold held firm at $US3,350 an ounce. The sense of relief stemming from a positive conclusion to US-China trade talks earlier this week, which President Donald Trump said was a "great deal with China", evaporated by Thursday. Adding yet another dose of uncertainty in the markets, Trump said the US would send out letters in one to two weeks outlining the terms of trade deals to dozens of other countries, which they could embrace or reject. "Markets may have no choice but to respond to Trump's tariff threat - even if it's just posturing to bring others to the table. The gap between 'risk-on' positioning and real-world risks has stretched too far," said Charu Chanana, chief investment strategist at Saxobank. Trump's erratic tariff policies have roiled global markets this year, prompting hordes of investors to exit US assets, especially the dollar, as they worried about rising prices and slowing economic growth. The euro, one of the beneficiaries of the dollar's decline, touched a seven-week high and was last at $US1.1535. US Treasuries also rallied in price, pushing yields down 1.5 basis points to below 4.4 per cent, while two-year yields, which are more sensitive to inflation and interest-rate expectations, eased 1.6 basis points to 3.93 per cent. Later in the day, the focus will be on a producer inflation report as some of the components feed into the Fed's preferred inflation gauge - the Personal Consumption Expenditure Index. Wednesday's consumer index kept alive the prospect of the Federal Reserve cutting rates by a quarter point, but only in September, as policymakers assess how tariffs work their way through the real economy. "I suspect it's probably going to be a combination of the two. Therefore it makes sense for the Fed to wait and see what happens rather than rushing into a rate cut," AMP Capital's head of investment strategy and chief economist Shane Oliver said. Oil, which has fallen by 20 per cent in the last year, eased by one per cent to $US69.07 a barrel, but remained near two-month highs, adding another moving part to the outlook for interest rates. The dollar has neared a 2025 low while stocks eased from record highs, as a cocktail of rising Middle East tensions and concern over the fragility of a trade truce between Washington and Beijing drew investors into safe-haven assets. Separately, a report on US consumer inflation on Wednesday showed overall price pressures remained contained in May, largely due to declines in the cost of gasoline, cars and housing. But most economists expect inflation to pick up as the impact of US tariffs begins to bite. The dollar, which has lost around 10 per cent in value against a basket of currencies this year, skimmed its lowest levels since late April, which in turn, marked its lowest level in three years. Global stocks took a breather on Thursday from the almost-unbroken rally that has run since early April, leaving the MSCI All-Country World index down 0.1 per cent, just below Wednesday's all-time high. In Europe, the STOXX 600 fell 0.8 per cent, led mostly by airlines and autos, given the strength in the oil price, while futures on the S&P 500 and Nasdaq fell 0.5 per cent. The US administration on Wednesday said US personnel were being moved out of the Middle East due to heightened security risks in the region, which briefly drove oil prices up by four per cent before they receded. "(A flare-up in tensions) is a significant tail risk, but I don't think it is anybody's baseline forecasts. So it's something to watch if there is a real escalation there, then markets will take fright and that would have ramifications for the oil price," Daiwa Capital economist Chris Scicluna said. Iran, for its part, said it will not abandon its right to uranium enrichment, a senior Iranian official told Reuters on Thursday, adding that a "friendly" regional country had alerted Tehran over a potential military strike by Israel. Classic safe-haven assets got a lift. The Swiss franc and the Japanese yen strengthened, pushing the dollar down by around 0.6 per cent against both currencies, while gold held firm at $US3,350 an ounce. The sense of relief stemming from a positive conclusion to US-China trade talks earlier this week, which President Donald Trump said was a "great deal with China", evaporated by Thursday. Adding yet another dose of uncertainty in the markets, Trump said the US would send out letters in one to two weeks outlining the terms of trade deals to dozens of other countries, which they could embrace or reject. "Markets may have no choice but to respond to Trump's tariff threat - even if it's just posturing to bring others to the table. The gap between 'risk-on' positioning and real-world risks has stretched too far," said Charu Chanana, chief investment strategist at Saxobank. Trump's erratic tariff policies have roiled global markets this year, prompting hordes of investors to exit US assets, especially the dollar, as they worried about rising prices and slowing economic growth. The euro, one of the beneficiaries of the dollar's decline, touched a seven-week high and was last at $US1.1535. US Treasuries also rallied in price, pushing yields down 1.5 basis points to below 4.4 per cent, while two-year yields, which are more sensitive to inflation and interest-rate expectations, eased 1.6 basis points to 3.93 per cent. Later in the day, the focus will be on a producer inflation report as some of the components feed into the Fed's preferred inflation gauge - the Personal Consumption Expenditure Index. Wednesday's consumer index kept alive the prospect of the Federal Reserve cutting rates by a quarter point, but only in September, as policymakers assess how tariffs work their way through the real economy. "I suspect it's probably going to be a combination of the two. Therefore it makes sense for the Fed to wait and see what happens rather than rushing into a rate cut," AMP Capital's head of investment strategy and chief economist Shane Oliver said. Oil, which has fallen by 20 per cent in the last year, eased by one per cent to $US69.07 a barrel, but remained near two-month highs, adding another moving part to the outlook for interest rates. The dollar has neared a 2025 low while stocks eased from record highs, as a cocktail of rising Middle East tensions and concern over the fragility of a trade truce between Washington and Beijing drew investors into safe-haven assets. Separately, a report on US consumer inflation on Wednesday showed overall price pressures remained contained in May, largely due to declines in the cost of gasoline, cars and housing. But most economists expect inflation to pick up as the impact of US tariffs begins to bite. The dollar, which has lost around 10 per cent in value against a basket of currencies this year, skimmed its lowest levels since late April, which in turn, marked its lowest level in three years. Global stocks took a breather on Thursday from the almost-unbroken rally that has run since early April, leaving the MSCI All-Country World index down 0.1 per cent, just below Wednesday's all-time high. In Europe, the STOXX 600 fell 0.8 per cent, led mostly by airlines and autos, given the strength in the oil price, while futures on the S&P 500 and Nasdaq fell 0.5 per cent. The US administration on Wednesday said US personnel were being moved out of the Middle East due to heightened security risks in the region, which briefly drove oil prices up by four per cent before they receded. "(A flare-up in tensions) is a significant tail risk, but I don't think it is anybody's baseline forecasts. So it's something to watch if there is a real escalation there, then markets will take fright and that would have ramifications for the oil price," Daiwa Capital economist Chris Scicluna said. Iran, for its part, said it will not abandon its right to uranium enrichment, a senior Iranian official told Reuters on Thursday, adding that a "friendly" regional country had alerted Tehran over a potential military strike by Israel. Classic safe-haven assets got a lift. The Swiss franc and the Japanese yen strengthened, pushing the dollar down by around 0.6 per cent against both currencies, while gold held firm at $US3,350 an ounce. The sense of relief stemming from a positive conclusion to US-China trade talks earlier this week, which President Donald Trump said was a "great deal with China", evaporated by Thursday. Adding yet another dose of uncertainty in the markets, Trump said the US would send out letters in one to two weeks outlining the terms of trade deals to dozens of other countries, which they could embrace or reject. "Markets may have no choice but to respond to Trump's tariff threat - even if it's just posturing to bring others to the table. The gap between 'risk-on' positioning and real-world risks has stretched too far," said Charu Chanana, chief investment strategist at Saxobank. Trump's erratic tariff policies have roiled global markets this year, prompting hordes of investors to exit US assets, especially the dollar, as they worried about rising prices and slowing economic growth. The euro, one of the beneficiaries of the dollar's decline, touched a seven-week high and was last at $US1.1535. US Treasuries also rallied in price, pushing yields down 1.5 basis points to below 4.4 per cent, while two-year yields, which are more sensitive to inflation and interest-rate expectations, eased 1.6 basis points to 3.93 per cent. Later in the day, the focus will be on a producer inflation report as some of the components feed into the Fed's preferred inflation gauge - the Personal Consumption Expenditure Index. Wednesday's consumer index kept alive the prospect of the Federal Reserve cutting rates by a quarter point, but only in September, as policymakers assess how tariffs work their way through the real economy. "I suspect it's probably going to be a combination of the two. Therefore it makes sense for the Fed to wait and see what happens rather than rushing into a rate cut," AMP Capital's head of investment strategy and chief economist Shane Oliver said. Oil, which has fallen by 20 per cent in the last year, eased by one per cent to $US69.07 a barrel, but remained near two-month highs, adding another moving part to the outlook for interest rates. The dollar has neared a 2025 low while stocks eased from record highs, as a cocktail of rising Middle East tensions and concern over the fragility of a trade truce between Washington and Beijing drew investors into safe-haven assets. Separately, a report on US consumer inflation on Wednesday showed overall price pressures remained contained in May, largely due to declines in the cost of gasoline, cars and housing. But most economists expect inflation to pick up as the impact of US tariffs begins to bite. The dollar, which has lost around 10 per cent in value against a basket of currencies this year, skimmed its lowest levels since late April, which in turn, marked its lowest level in three years. Global stocks took a breather on Thursday from the almost-unbroken rally that has run since early April, leaving the MSCI All-Country World index down 0.1 per cent, just below Wednesday's all-time high. In Europe, the STOXX 600 fell 0.8 per cent, led mostly by airlines and autos, given the strength in the oil price, while futures on the S&P 500 and Nasdaq fell 0.5 per cent. The US administration on Wednesday said US personnel were being moved out of the Middle East due to heightened security risks in the region, which briefly drove oil prices up by four per cent before they receded. "(A flare-up in tensions) is a significant tail risk, but I don't think it is anybody's baseline forecasts. So it's something to watch if there is a real escalation there, then markets will take fright and that would have ramifications for the oil price," Daiwa Capital economist Chris Scicluna said. Iran, for its part, said it will not abandon its right to uranium enrichment, a senior Iranian official told Reuters on Thursday, adding that a "friendly" regional country had alerted Tehran over a potential military strike by Israel. Classic safe-haven assets got a lift. The Swiss franc and the Japanese yen strengthened, pushing the dollar down by around 0.6 per cent against both currencies, while gold held firm at $US3,350 an ounce. The sense of relief stemming from a positive conclusion to US-China trade talks earlier this week, which President Donald Trump said was a "great deal with China", evaporated by Thursday. Adding yet another dose of uncertainty in the markets, Trump said the US would send out letters in one to two weeks outlining the terms of trade deals to dozens of other countries, which they could embrace or reject. "Markets may have no choice but to respond to Trump's tariff threat - even if it's just posturing to bring others to the table. The gap between 'risk-on' positioning and real-world risks has stretched too far," said Charu Chanana, chief investment strategist at Saxobank. Trump's erratic tariff policies have roiled global markets this year, prompting hordes of investors to exit US assets, especially the dollar, as they worried about rising prices and slowing economic growth. The euro, one of the beneficiaries of the dollar's decline, touched a seven-week high and was last at $US1.1535. US Treasuries also rallied in price, pushing yields down 1.5 basis points to below 4.4 per cent, while two-year yields, which are more sensitive to inflation and interest-rate expectations, eased 1.6 basis points to 3.93 per cent. Later in the day, the focus will be on a producer inflation report as some of the components feed into the Fed's preferred inflation gauge - the Personal Consumption Expenditure Index. Wednesday's consumer index kept alive the prospect of the Federal Reserve cutting rates by a quarter point, but only in September, as policymakers assess how tariffs work their way through the real economy. "I suspect it's probably going to be a combination of the two. Therefore it makes sense for the Fed to wait and see what happens rather than rushing into a rate cut," AMP Capital's head of investment strategy and chief economist Shane Oliver said. Oil, which has fallen by 20 per cent in the last year, eased by one per cent to $US69.07 a barrel, but remained near two-month highs, adding another moving part to the outlook for interest rates.
Yahoo
27-03-2025
- Business
- Yahoo
Barclays switches preference to global fixed income over equities on tariff risks
(Reuters) - Barclays said on Thursday it favors fixed income investments over equities for the first time in "several quarters" and warned global economic growth was at risk due to U.S. President Donald Trump's escalating tariff policies. Despite hurdles such as rising prices and poor fiscal outlooks in Western economies, the risk to fixed income assets was less than to equities, Barclays analysts said in a note. "We have been overweight global equities over fixed income for several quarters, even as valuations became stretched. But now, the policy risks strike us as tilted largely to the downside," they wrote, without saying exactly how long they had preferred equities. Trump has imposed a swathe of tariffs on many countries, including top U.S. trading partners, with his latest move being a 25% levy on auto imports. The breadth and speed of his policies have rattled global financial markets. So far this year, the MSCI All-Country World index, a benchmark for global equities, has risen just 0.55%, given the potential for higher tariffs to lift inflation, dent corporate profits and slow the global economy. The U.S. benchmark S&P 500 index has fared worse, sliding nearly 3%. However, benchmark 10-year Treasury bonds have rallied, with yields dropping to 4.3595% from a January 14 peak of 4.8090%. Barclays said it expects a considerable slowdown in U.S. and global economic growth this year. While it reiterated its forecast of 1.5% U.S. GDP growth and 2.9% global growth for 2025, it included a caveat. "If worst-case outcomes on tariffs are realized, even those forecasts may end up being too optimistic." Barclays, on Wednesday, had slashed its year-end target for the S&P 500 from 6,600 points, to 5,900 points, the lowest among Wall Street brokerages. The S&P closed at 5,712.20 on Wednesday. Sign in to access your portfolio
Zawya
27-03-2025
- Business
- Zawya
Barclays switches preference to global fixed income over equities on tariff risks
Barclays said on Thursday it favors fixed income investments over equities for the first time in "several quarters" and warned global economic growth was at risk due to U.S. President Donald Trump's escalating tariff policies. Despite hurdles such as rising prices and poor fiscal outlooks in Western economies, the risk to fixed income assets was less than to equities, Barclays analysts said in a note. "We have been overweight global equities over fixed income for several quarters, even as valuations became stretched. But now, the policy risks strike us as tilted largely to the downside," they wrote, without saying exactly how long they had preferred equities. Trump has imposed a swathe of tariffs on many countries, including top U.S. trading partners, with his latest move being a 25% levy on auto imports. The breadth and speed of his policies have rattled global financial markets. So far this year, the MSCI All-Country World index , a benchmark for global equities, has risen just 0.55%, given the potential for higher tariffs to lift inflation, dent corporate profits and slow the global economy. The U.S. benchmark S&P 500 index has fared worse, sliding nearly 3%. However, benchmark 10-year Treasury bonds have rallied, with yields dropping to 4.3595% from a January 14 peak of 4.8090%. Barclays said it expects a considerable slowdown in U.S. and global economic growth this year. While it reiterated its forecast of 1.5% U.S. GDP growth and 2.9% global growth for 2025, it included a caveat. "If worst-case outcomes on tariffs are realized, even those forecasts may end up being too optimistic." Barclays, on Wednesday, had slashed its year-end target for the S&P 500 from 6,600 points, to 5,900 points, the lowest among Wall Street brokerages. The S&P closed at 5,712.20 on Wednesday.
Reuters
27-03-2025
- Business
- Reuters
Barclays switches preference to global fixed income over equities on tariff risks
March 27 (Reuters) - Barclays said on Thursday it favors fixed income investments over equities for the first time in "several quarters" and warned global economic growth was at risk due to U.S. President Donald Trump's escalating tariff policies. Despite hurdles such as rising prices and poor fiscal outlooks in Western economies, the risk to fixed income assets was less than to equities, Barclays analysts said in a note. "We have been overweight global equities over fixed income for several quarters, even as valuations became stretched. But now, the policy risks strike us as tilted largely to the downside," they wrote, without saying exactly how long they had preferred equities. Trump has imposed a swathe of tariffs on many countries, including top U.S. trading partners, with his latest move being a 25% levy on auto imports. The breadth and speed of his policies have rattled global financial markets. So far this year, the MSCI All-Country World index (.dMIWD00000PUS), opens new tab, a benchmark for global equities, has risen just 0.55%, given the potential for higher tariffs to lift inflation, dent corporate profits and slow the global economy. The U.S. benchmark S&P 500 index (.SPX), opens new tab has fared worse, sliding nearly 3%. However, benchmark 10-year Treasury bonds have rallied, with yields dropping to 4.3595% from a January 14 peak of 4.8090%. Barclays said it expects a considerable slowdown in U.S. and global economic growth this year. While it reiterated its forecast of 1.5% U.S. GDP growth and 2.9% global growth for 2025, it included a caveat. "If worst-case outcomes on tariffs are realized, even those forecasts may end up being too optimistic." Barclays, on Wednesday, had slashed its year-end target for the S&P 500 from 6,600 points, to 5,900 points, the lowest among Wall Street brokerages. The S&P closed at 5,712.20 on Wednesday.
