Dollar strength hurts stocks, oil bounces off lows
NEW YORK, March 25, 2016
Global equity markets declined on Thursday and the dollar added to a recent string of gains after another US Federal Reserve official talked of higher US interest rates before long.
The dollar rose for a fifth day, adding 0.07 per cent to 96.116 against a basket of major currencies. The streak is the longest for the dollar in nearly a year and puts the greenback on track for its first weekly rise in a month.
The gains were further supported by remarks of St Louis Fed President James Bullard, who joined a chorus of officials who have recently highlighted the chance of at least two rate increases this year, with the first perhaps as soon as April.
The dollar's strength weighed on oil prices, although they partly rebounded from session lows after a drop in the US oil rig count eased some concerns stemming from recent data showing record high US stockpiles.
"You have to somehow break out of the cycle, when you are so dependent on everything the Fed does or everything a central banker says. That kind of locks up the market," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
"It is really frustrating we are stuck with these guys, and every time they say something the market reacts."
The rally in crude prices to above $40 a barrel had been a big factor in stock market advances in recent weeks, helping the benchmark S&P 500 rise more than 12 per cent from a February 11 low.
The Dow Jones industrial average rose 13.35 points, or 0.08 per cent, to 17,515.94, the S&P 500 dropped 0.74 points, or 0.04 per cent, to 2,035.97 and the Nasdaq Composite added 4.64 points, or 0.1 per cent, to 4,773.51.
Volume across markets was light, with many closing on Friday ahead of the Easter holiday.
US crude settled down 0.83 per cent at $39.46 a barrel, recovering from a session low of $38.33 after sliding four per cent on Wednesday. Brent settled down slightly, off 0.07 per cent at $40.44, after an earlier drop to $39.22.
The oil pullback has pressured US and European equities this week, with the pan-European 300 index and S&P 500 suffering their worst drop in six weeks.
MSCI's index of world shares, down 0.57 per cent on the session, was off 1.4 per cent for the week.
The stronger dollar and softer oil prices were reflected in data on US durable goods orders, which showed a drop in February, while weekly jobless claims continued to point to a solid labour market.
Gold slipped 0.2 per cent to $1,217.30 an ounce, after hitting its lowest since late February at $1,212.20, and was down three per cent for the week, its worst performance since November.
Copper, down nearly two per cent for the week, was off 0.09 per cent at $4,945.15 a tonne.
Benchmark US 10-year notes were last down 7/32 in price to yield 1.9 per cent, up from 1.875 per cent on Wednesday. - Reuters
