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Weak dollar lifts gold and franc havens

The US dollar hovered near a four-year low on Wednesday after US President Donald Trump again played down its weakness, bolstering safe-haven demand and helping to drive gold to fresh record highs. Wall Street closed mixed on Tuesday as heavy losses in healthcare weighed on the Dow, even as the S&P 500 set a new record, which helped lift Asian equity markets led by semiconductor and AI-related names. European stocks also gained on Tuesday, with banks reaching their highest levels since 2008. Investors' focus remains on the Federal Reserve’s interest-rate decision later Wednesday and a busy line-up of corporate earnings, with Microsoft, Tesla and Meta reporting later in the day.

  • Date
  • Auteur Shane Strowmatt, Senior Investment Writer
  • Temps de lecture 5 minutes

US dollars
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The US dollar traded close to a four-year low on Wednesday after US President Donald Trump dismissed concerns about its recent weakness, prompting further selling and pushing the euro, yen, franc and sterling higher ahead of the Federal Reserve’s policy decision. The Dollar Index recovered 0.3% on Wednesday after dropping over 1% the previous session to a four-year trough of 95.6 points. Meanwhile, the Swiss franc strengthened as a safe-haven currency on Tuesday, pushing the US dollar briefly down to 0.76 and the euro below 0.92, both near record lows for the two currencies against the franc outside the turbulence surrounding the end of the euro minimum exchange rate in January 2015. Trump’s tolerance for a weaker dollar may encourage further selling, with some market participants arguing that the slide reflects a crisis of confidence linked to erratic trade and foreign policy and could push investors towards hard assets and emerging markets. The softer dollar underpinned commodities, with gold reaching a record above USD 5260 per ounce and Brent crude touching a four-month high near USD 68 a barrel.

US stocks mixed as Dow lags

US equities ended mixed on Tuesday, with the Dow Jones Industrial Average falling 0.8% to 49,003.41 points as health insurer UnitedHealth slumped nearly 20% on disappointment over stagnant US government payments for private Medicare Advantage plans. The broader S&P 500 rose 0.4% to a record 6978.60 points and moved close to the 7000 mark, while the Nasdaq 100 climbed 0.9% to 25,939.74 points, supported by chipmakers as investors positioned ahead of results from large technology companies this week. The backdrop of macroeconomic data was weak, with US consumer confidence dropping to its lowest level since May 2014 in January, falling 9.7 points from December, according to data released on Tuesday by the Conference Board. Consumers’ comments highlighted ongoing worries about prices, particularly for energy and food, as well as concerns about tariffs, politics, the labour market, health and conflicts, although a separate University of Michigan sentiment index ticked up in January and remains well under its level a year earlier.

Asian tech stocks gain ahead of Fed

Asian equities advanced on Wednesday, led by technology and AI-related shares, as investors followed tech gains on Wall Street and positioned for quarterly results from large US technology groups in the coming days, such as Microsoft, Meta Platforms, Tesla and Apple. South Korea’s KOSPI (+1.7%) and Hong Kong’s Hang Seng (+2.3%) outperformed, helped by strong semiconductor and tech names, while Chinese mainland indices and India’s Nifty futures also rose. Japan’s Nikkei 225 was trading essentially flat. Australia’s S&P/ASX 200 was trading 0.1% lower, after the country’s inflation rate reached 3.6% in the fourth quarter, its highest level in six quarters and above the Reserve Bank of Australia’s 2%-3% target range, up from 3.2% in the third quarter. Recent comments from senior RBA officials have indicated that inflation above 3% is seen as “too high” and suggest that interest rate cuts are unlikely in the near term, with further tightening remaining a possibility if price pressures persist.

European stocks edge higher before Fed decision

European equities advanced on Tuesday, with the euro-area Euro Stoxx 50 rising 0.6% to 5994.59 points and briefly moving back above the 6,000 mark, while the Swiss SMI increased 0.6%. Market participants cited upcoming quarterly results from major US technology companies and Wednesday’s Federal Reserve interest-rate decision as reasons for investors’ cautious positioning, with no change in US policy expected until a new Fed chair succeeds Jerome Powell after his term ends in May. Banks led sector performance as the regional bank index climbed to its highest level since 2008.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from ADP, ASML, AT&T, Danaher, Elevance Health, IBM, Lam Research, Lonza, Meta Platforms, Microsoft, MSCI, Progressive, ServiceNow, Starbucks, and Tesla.

Economic data in focus: German GfK Consumer Climate (08:00), Bank of Canada interest rate decision (15:45) and Federal Reserve interest rate decision (20:00).

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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.