Euro is stronger but global equities are cautious after hawkish ECB comments

MSCI’s world equity index, which tracks shares in 47 countries, was up 0.24%, mainly as a result of a strong showing from Asian stocks. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.63%.

Dollar falls, emerging markets steady

The euro’s rise put pressure on the US dollar index, that measures performance against six major currencies, with the main weighting given to the euro. The index fell 0.27%.

The Mexican peso steadied on Wednesday, after falling to its weakest since February 2017 late on Tuesday after the US raised the possibility of turning negotiations over the North American Free Trade Agreement (Nafta) into bilateral talks.

Trump economic adviser Larry Kudlow also revived the possibility that the president will seek to replace Nafta with bilateral deals with Canada and Mexico.

The threat of rising trade protectionism has already taken a toll on global trade and could increase risks to growth, ANZ analysts Daniel Been and Giulia Lavinia Specchia said in a note.

“Against this backdrop, we believe financial markets will become even more sensitive to bad news,” they wrote, while recommending a defensive stance on risk-taking.

Most other emerging currencies strengthened against the dollar, already lower versus the strong euro.

MSCI’s emerging market currency index ticked higher, rising 0.1%. Oil prices rose on Wednesday after Venezuela raised the prospect of a halt to some crude exports, but gains were capped by reports that the US government had asked Saudi Arabia and some other Opec producers to increase output. Brent crude rose 0.6% to $75.86 a barrel.

Reuters