U.S. stocks wrapped up a volatile session slightly subdued while the dollar surged. Treasury yields joined the greenback with a surprising advance. This dynamic series of reactions were sparked by the promises of steady rate hikes by the Fed president in New York. Another contributing factor was investors’ reactions to the U.S. military strike in Syria. This was the first military strike under Trump’s administration, which is an early blow to the new nominee. Things were equally mixed in Europe, with stocks rising while the euro slipped. These contrasting figures showcase the market’s growing uncertainty.
Stocks Fluctuate with Political Upsets
“I would think we’d be seeing more risk off with everything that could happen into the weekend with Syria, to the continued lengthening of the tax plan timeline, as well as Dudley’s comments,” Andrew Brenner, head of international fixed income for National Alliance Capital Markets, said by phone. “But there’s a short base out there and people are under-invested in equities and very negative, which always keeps a bid into the market.”
The military strike in Syria may be stealing the show, but multiple factors are causing turbulence in the U.S. markets. The world’s largest economy produced disappointing jobs reports, since they showcased low employment rates. To make things even more volatile, equity market highs winded down after recent announcements from the Feds. New York Fed President William Dudley teased investors after the last meeting. He signaled that officials won’t slow the pace of rate hikes. This wasn’t surprising, since they are scrambling to trim their balance sheet.
On top of the aforementioned incidents, a few looming events are adding more uncertainty. Investors are keeping eye on U.S. Secretary of State Rex Tillerson’s visit to the Group of Seven Gathering in Italy. He will be meeting also be meeting with Russian counterpart Sergei Lavrov in Moscow the following week. In international news Argentina, Brazil, Canada, Chile & South Korea will all be setting interest weeks next week. U.S. banks are preparing to report first quarter earnings, which will give some insight on where the market is going.
All these factors caused U.S. stocks to slip while the dollar hit new heighs. The S&P 500 Index reacted wildly to Thursday night’s attack in Syria, falling 0.7%. This pulled it out of recovery, wrapping up with a 0.1% loss. In stark contrast, the greenback enjoyed its best week in 2 months. The Bloomberg Dollar Spot Index rose 0.3%, which pulled it out of earlier losses with a weekly advance of 0.6%. This was a landmark victory, since it was by far the boldest advance this month.
In Europe, stocks & currencies expressed mixed results. The Stoxx Europe 600 Index enjoyed a brief increase of 0.1% after positive news broke in China. Volatility measures from Hong Kong emboldened investors, which temporarily boosted European stocks. Even though stocks stayed steady, the euro is still on the decline. This week it dropped 0.3%, while the British pound lost 0.6%.
These mixed reactions showcase the volatility of the current market. Stocks & currencies may be recoiling, but commodities are staying on track. Crude added 1%, leaving it at $52.245 a barrel. Gold shared this optimism after rising 0.3% to $1,256.90 an ounce. This shows that the market is ready to calm down, but things won’t settle until investors regain confidence.