Dollar and gold falters as Trump hits fed, stocks drop: markets wrap

The dollar erased most of its gains and treasuries strengthened after President Donald Trump criticized the Federal Reserve for raising interest rates. U.S. equities were mostly lower as financial shares led declines.

Commodities tumbled into correction territory earlier Thursday, sliding again in the face of the resurgent dollar and lingering global trade tensions. Among the recent milestones: Copper dipping below $6,000. West Texas Intermediate crude tested $68 before rebounding. Gold crashing through $1,220.

Trump expressed frustration with the central bank in an CNBC interview. The critique follows Fed Chairman Jerome Powell’s upbeat assessment this week of the domestic economy. The greenback had rallied for three consecutive days after Powell pledged to continue to tighten policy to keep the domestic economy from overheating, pressuring emerging market assets and commodities.

“The market is already challenging the notion that the Fed can tighten as much as it has been projecting, but even so, it does throw a bit of a monkey wrench into that debate,” said Mazen Issa, a senior foreign-exchange strategist at TD in New York. “This is a knee jerk reaction.”

While Powell’s comments that the U.S. economy may not yet have reached full employment helped cement investor expectations for the path of monetary tightening, the strengthening dollar has done little to lift the mood elsewhere. The immediate focus in the stock market remains on company results, but trade threats are never far away. China said on Thursday it doesn’t want a trade war, but isn’t afraid of one.

The dollar’s advance had weighed on emerging-market assets and commodities such as copper sold off. The pound slumped as tensions over Brexit endured and retail sales figures disappointed.

These are the main moves in markets:

Stocks

The S&P 500 Index fell 0.2 percent as of 2:18 p.m. in New York. The Dow Jones Industrial Average eased 0.3 percent. The Nasdaq Composite Index slumped 0.2 percent. The U.K.’s FTSE 100 Index gained 0.9 percent. The MSCI Emerging Market Index slumped 1 percent. The Stoxx Europe 600 Index fell 0.2 percent.

Currencies

The Bloomberg Dollar Spot Index was flat after rising as much as 0.6 percent. The euro rose 0.3 percent to $1.1672. The British pound dropped 0.3 percent to $1.3035. The Japanese yen gained 0.6 percent to 112.18 per dollar. South Africa’s rand climbed 1.7 percent to 13.50 per dollar.

Bonds

The yield on 10-year Treasuries fell three basis points to 2.84 percent. Italian 10-year yields were little changed at 2.51 percent. Germany’s 10-year yield fell one basis point to 0.33 percent.

Commodities

West Texas Intermediate crude rose 1.5 percent to $69.76 a barrel. Gold fell 0.3 percent to $1,224.35 an ounce, after reaching the weakest level in more than a year.

(By Sarah Ponczek)