Market Headlines 19/7/2017

US

• The US dollar slid to a 10-month low against a basket of currencies yesterday as the failure of Republicans to push through healthcare reform cast doubts over the likelihood of the Trump administration’s infrastructure and tax reform agendas.
• The S&P 500 was little changed for the session, however, remaining within touching distance of Friday’s record close. Technology stocks in particular continued their recent trend of outperformance as the tech-heavy Nasdaq index rose to a new high.
• The leg lower for the dollar coincided with a drop in bond yields. The yield on 10 year US Treasury bonds fell 5bps to 2.26%. In oil markets, rumours that Saudi Arabia was considering a cut to exports helped Brent crude recover some of the previous days declines. Oil prices ultimately settled 0.9% higher.

Europe

• The strength of the euro weighed on European equity markets yesterday. The Euro Stoxx 50 index declined 1.1% and the German DAX – which contains a number of large export-sensitive stocks – fell 1.3%.
• Euro/Dollar traded within a whisker of $1.16 yesterday – a key technical level – placing further importance and investor focus on the language used and any signals of policy changes from Mario Draghi at the ECB meeting tomorrow.
• Sterling generally bucked the trend as it traded 0.1% lower against the dollar. Weaker than expected UK inflation data was interpreted as giving the Bank of England some breathing space in its interest rate policy.

Asia

• Asian equities finished higher overnight as the dollar recovered from a 10-month low. Chinese equities were the standout performer, gaining 1.4%, while Japanese indices were buoyed by weakness in the Yen.