By Alwyn Scott
NEW YORK (Reuters) – The dollar gained but equities, gold and oil retreated on Wednesday after the Federal Reserve suggested it could pursue aggressive stimulus measures for longer than under its previous strategy, minutes from its last policy meeting showed.
Economic recovery was highly uncertain and employment gains in May and June had likely slowed, the U.S. central bank said, noting that additional “substantial improvement” in the labor market would hinge on a “broad and sustained” reopening of business activity, according to minutes of the July 28-29 meeting released Wednesday.
The readout on Fed discussions provide hints to further action that the U.S. central bank could take in September. No change in interest rate policy is expected until end-2021.
Before the Fed news, the S&P 500 and the Nasdaq hit all-time highs as Apple Inc rose 1.4% to become the first publicly-listed U.S. company to reach $2 trillion in market capitalization, with strong results from retailers Target and Lowe’s also lifting sentiment.
The S&P 500 on Tuesday completed its fastest recovery ever from a bear market to confirm a bull market by closing above its previous high of 3,386.15, set in February.
The dollar index rose 0.805%, with the euro down 0.67% to $1.1849.
The Japanese yen weakened 0.46% versus the greenback at 105.88 per dollar.
Spot gold prices fell -2.99% to $1,941.06 an ounce.
Brent crude futures fell $0.18 to $45.28 a barrel. U.S. crude futures slid $0.04 to $42.85 a barrel.
On Wall Street, the Dow Jones Industrial Average fell 0.01%, the S&P 500 lost 0.19% and the Nasdaq Composite dropped 0.33%.
Crude prices eased on concerns U.S. fuel demand faces a slow recovery amid stalled talks on an economic stimulus package in Washington, offsetting support from a bigger-than-expected drawdown in U.S. crude stocks.
Earlier, in Europe, travel and leisure shares rose, with British Airways owner International Airlines Group up 5.3% on a British plan to use COVID-19 testing at London’s Heathrow Airport to help cut the time travelers have to spend in quarantine.
MSCI’s benchmark for global equity markets rose 0.25% to 573.33, while its index for emerging markets stocks rose 0.45%.
Europe’s broad FTSEurofirst 300 index added 0.68% to 1,434.54.
The Fed’s actions to blunt the impact of the coronavirus pandemic have helped lift riskier assets to all-time highs but have reduced demand for safe-havens and battered the dollar.
Big-box chain Target Corp jumped 12% after posting its best quarterly comparable sales growth and online revenue that nearly tripled.
In Europe, travel and leisure shares rose, with British Airways owner International Airlines Group up 5.3% on a British plan to use COVID-19 testing at London’s Heathrow Airport to help cut the number of days travelers have to spend in quarantine.
Overnight, MSCI’s broadest index of Asia-Pacific shares outside of Japan fell 0.2%, retreating from a seven-month high hit after the S&P 500’s record.
(Reporting by Alwyn Scott, Herbert Lash and Tom Wilson; Editing by Will Dunham and Nick Zieminski)
The post Dollar extends gain but shares retreat as Fed signals stimulus appeared first on Morningology.
