Wall Street Surprisingly Calm Amid a Sea of Chaos
U.S. equities were little changed on Monday, as Wall Street extended a recent pattern of quiet trade. At the same time, the currency and commodity markets were on fire after a recent meeting of global central bankers offered scant details about the future of monetary policy.
Wall Street’s Snooze-Fest
Not much happened on Wall Street Monday. The large-cap S&P 500 Index traded within a ten-point range before settling incrementally higher. The benchmark added 1.19 points, or 0.1%, to finish at 2,444.24.
A 0.6% gain in healthcare stocks dragged the index higher as energy and financial shares declined.
The Dow Jones Industrial Average closed at 21,808.40, where it was virtually unchanged. Meanwhile, the technology-heavy Nasdaq Composite Index added 0.3% to close at 6,283.02.
The New York session followed sharp losses in Europe after the euro jumped to 31-month highs against the dollar.
Asian stocks are mostly higher Tuesday, with China’s CSI 300 Index climbing more than 1% in intraday trade. However, U.S. and European futures were in the deep red.
Dollar Dive Powers FX Peers
The U.S. dollar nosedived after a recent speech by Federal Reserve Chair Janet Yellen gave no indication about the direction of monetary policy. The U.S. dollar index (DXY) has declined more than 1.1% since Friday to reach its lowest level since January 2015. The DXY based is down 9.8% this year, putting it among the world’s worst-performing currencies.
Europe’s common currency rose to two-and-half year highs against the greenback Monday. At its highest, the euro clocked in at 1.1983 U.S. The EUR/USD exchange rate referenced by the FX market is trading roughly 30 pips below the psychological 1.20 level.
Strong currency gains have also been reported for the British pound and Japanese yen.
Mixed economic data out of Japan influenced the direction of the yen Tuesday morning. Tokyo’s Ministry of Health, Labor and Welfare reported Tuesday that job availability rose to 43-year highs in July as unemployment held steady. At the same time, average monthly household spending dipped 0.2% from a year earlier.
Gold Approaches One-Year High
A plunging dollar triggered a sharp rally in precious metals at the start of the week, with gold trading at its highest level since September 2016. December gold futures rose 1.3% on Monday to $1,315.30 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices continued higher on Tuesday, rising 0.5% to $1,322.10 a troy ounce.
December gold is the most actively traded futures contract.
Bullion is also being supported by risk aversion amid tensions on the Korean peninsula. Various news outlets have confirmed that North Korea launched a missile that flew over Japan, igniting fresh fears about possible military intervention.
Japanese Prime Minister Shinzo Abe said the attack is the “most serious and grave ever threat” to the country. The missile was reportedly fired just before 6.a.m. local time in Japan. The missile was in flight for roughly 14 minutes.