Monday 23 October 2017

Sell-off in emerging markets deepens following Trump triumph

Federal Reserve vice chairmanStanley Fischer
Federal Reserve vice chairmanStanley Fischer

John Mulligan/Bloomberg

Global stocks joined declines in bonds and commodities as a sell-off in emerging markets deepened with traders parsing the implications of a Trump presidency for the world's largest economy.

The MSCI All Country World Index pared its biggest weekly rally since September and the Dow Jones Industrial Average fluctuated near record. A rout in Latin American markets extended into a third day on bets that higher US interest rates would dampen the appeal of riskier assets around the world. The dollar rose toward its strongest level since March. Bonds continued to get pounded, with losses exceeding $1 trillion this week, and trading in Treasuries closed for a holiday. Gold, copper and oil tumbled.

Ireland's Iseq Overall Index fared better than some other European bourses. It was supported by a surging Bank of Ireland, with shares in the lender jumping 4.2pc to 22 cent as sterling strengthened. Permanent Tsb also advanced, rising 3.4pc to €2.69. Shares in Ryanair also climbed, rising 1pc to €14.10. Insulation maker Kingspan fared badly, shedding 5pc to €22.84.

The UK's FTSE-100 shed 1.4pc. Germany's DAX rose 0.3pc and France's CAC-40 fell 1pc.

Global stocks gained $1.3 trillion this week as traders bet Donald Trump will lower taxes, ease corporate regulations and ramp up spending to spur growth. Investors pushed down the value of bonds as the policies are seen boosting inflation and interest rates. Federal Reserve vice chairman Stanley Fischer said the central bank has almost reached its goals for maximum employment and price stability, strengthening the case for a hike. "We're taking a breather and beginning to think about the wider repercussions of" Trump's win, said Witold Bahrke of Nordea Investment Funds in Luxembourg.

"You can say this is pro-growth and pro-equity, but it depends hugely on the concrete type of measures he takes. We are moving away from the hope phase to the delivery phase."

Irish Independent

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