Cape Town - Investors hit the pause button on Tuesday,
with European stocks and the dollar trading little changed before President
Donald Trump addresses Congress. Oil retreated as gold also edged lower.
Shares of raw-material producers declined as the outlook
for industrial metals worsened, while construction companies rose a second day
after Trump said Monday he’ll spend “big” on infrastructure. Treasuries gained
after falling at the start of the week as the odds of a Federal Reserve
interest-rate increase in March jumped.
Even as global equities climbed to record levels,
investors have remained wary as they await details of Trump’s economic policies
and watch for signals on the timing for higher rates. The White House began
sketching out plans Monday, as Trump followed promises of infrastructure
spending with a caution that tax details won’t become clear until after the
costs of repealing the Affordable Care Act are known.
“Dollar bears should take caution if Trump follows
through on infrastructure and Yellen ratchets up the rate-hike rhetoric to end
the week,” said Stephen Innes, senior currencies trader in the Asia Pacific at
Oanda. “The big question for the market is, will Trump use tonight’s platform
to execute?”
Fed Bank of Dallas President Robert Kaplan said policy
makers should raise interest rates “sooner rather than later” and not pay
excessive attention to market expectations. The chance of a rate hike at the
central bank’s March 14-15 meeting jumped to 50 percent, federal funds futures
showed, from 34 percent just five days ago.
What’s coming up
this week:
Trump is expected to outline his priorities for the
nation in an address before a joint session of Congress on Tuesday night in the
US Fed officials are making speeches this week, including Chair Janet Yellen
who addresses an event in Chicago on Friday. This week’s economic data include
US personal income and spending. India and Australia will report on
fourth-quarter GDP. China’s PMI data are expected to show continued expansion.
Here are the main moves in markets:
Stocks
The Stoxx Europe 600 Index was little changed by 10:08
a.m. in London, after four straight days of losses. The index is still up 2.6
percent for February. Asia stocks erased gains after Japan’s Topix gave up
almost all of a 1 percent rise, with the steepest paring coming in the final
half hour of trading. The MSCI Asia Pacific Index trimmed its monthly gain to
2.2 percent.
Currencies
The Bloomberg Dollar Spot Index fell less than 0.1
percent. The yen added 0.3 percent to 112.35 per dollar, after sliding 0.5
percent Monday to snap a three-day winning streak. The British pound
slipped 0.1 percent to $1.2425. The currency is down 1.2 percent for the month.