⌛ Did you miss ProPicks’ 13% gains in May? Subscribe now & catch June’s top AI-picked stocks early.Unlock Stocks

Graphic - Stocks fly in first half but oil and dollar big losers

Published 30/06/2017, 12:28
© Reuters. A worker shelters from the rain as he passes the London Stock Exchange in the City of London
UK100
-
US500
-
JP225
-
DX
-
LCO
-
XU100
-
MSCIEF
-
MIWD00000PUS
-
DXY
-

LONDON (Reuters) - World stocks were on track for their best start to a year since 2003 while oil and the dollar were facing their biggest first-half drop for years.

The early months of 2017 were marked by the so-called Trump trades premised on U.S. President Donald Trump's pledges of multi-trillion dollar spending and by a change in Europe's political and growth outlook that has lured back investors.

But arguably the most significant shift for investors came in the last week of the second quarter when, in what looked like a concerted move, central bank policymakers appeared to signal it would soon be time to wind back the monetary stimulus that has buoyed markets for much of this decade.

As this graphic http://reut.rs/2sxO66c shows the dollar index (DXY), already down 4.5 percent for 2017 a week ago, was down 6.5 percent at Thursday's close and on track for its worst quarter in seven years and worst first half since 2003.

This despite the U.S. Federal Reserve raising interest rates twice this year.

The euro , boosted by European Central Bank President Mario Draghi hinting on Wednesday at tweaks to the bank's ultra-loose monetary policy stance, is up more than 8 percent year-to-date and heading for its best quarter in seven.

Dollar weakness has helped lift emerging equities, as measured by MSCI's main index (MSCIEF) almost 18 percent in dollar terms so far this year.

World stocks (MIWD00000PUS) have gained more than 10 percent in dollar terms, their best first half since 2003.

Japan's Nikkei 225 stock index (N225) gained 9.6 percent, just ahead of the S&P 500 (SPX) on 9.2 percent.

Stuck at the bottom of the performance league table, down 16.5 percent in dollar terms year-to-date is Brent crude oil (LCOc1), hit by a perception that output cuts agreed by OPEC producers and others will not be enough to stem the glut of oil.

It was on track for its worst first six months of any year since 1998.

In Brexit-bound Britain, which has just been through a messy election, the pound has dropped 3 percent against the euro. The weaker currency has been a boost for exporters, lifting the country's main FTSE 100 (FTSE) stock index 8.2 percent.

Emerging markets have shrugged off the U.S. rate rises and the oil and tech tumbles. Bonds in emerging market currencies have returned almost 10 percent in dollar terms, while hard currency sovereign debt is up 6 percent.

But within emerging markets there are losers as well as winners: http://tmsnrt.rs/2dZbdP5

Russian equities, heavily oil-reliant and a star of late 2016, have lost 17 percent but energy importer Turkey's stock index (XU100) has risen 30 percent, despite inflation, domestic political risks and policy wobbles.

The Mexican peso is the world's top performing currency, up 15 percent on the dollar, as faith wanes in Trump's ability to implement anti-trade and anti-immigration pledges. http://tmsnrt.rs/2egbfVh

Perhaps the biggest surprise has been Poland's zloty which has surged 13 percent against the dollar.

© Reuters. A worker shelters from the rain as he passes the London Stock Exchange in the City of London

Brazil's real has been one of the worst-performing currencies, down 4 percent in 2017 due to fresh corruption scandals that have hit the country.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.