Global equities rise, as dollars and US treasuries fall on Trump’s woes

New York — Benchmark US government debt yields slid to six-week lows on a flight to safety bid; and the dollar weakened further on Wednesday as investors assess how a conviction and a guilty plea of two former advisers impact US President Donald Trump.

A gauge of global equities rose, lifted by higher energy prices and strong earnings from retailers in a session that marked the longest US bull market. It came a day after the S&P 500 stock index set an all-time high.

US treasury yields also fell as contentious trade talks between US and Chinese officials were set to resume on Wednesday and as investors looked to minutes from the Federal Reserve’s August meeting, due later in the session.

“Beyond the political uncertainty associated with what’s going on in Washington, there are broader macro-economic concerns resulting from on-again, off-again trade tensions and, of course, where the Fed stands on this,” said Ian Lyngen, head of US rates strategy at BMO Capital Markets in New York.

On Tuesday, Trump’s former lawyer, Michael Cohen, pleaded guilty to charges of tax evasion, bank fraud and campaign-finance violations as the president’s former campaign chair, Paul Manafort, was convicted on eight charges.

Cohen would not accept a presidential pardon, his attorney said, and he wanted no part in what Trump’s former adviser saw as the president’s abuse of his clemency power. Cohen also questioned Trump’s loyalty to the US and saw him as unfit to hold office, his attorney, Lanny Davis, said in a round of television interviews.

Equity investors appeared less concerned about Trump as Wall Street marked what is widely considered a bull market that started in the midst of the global financial crisis a decade ago that wiped out more than half of the US stock market’s value. The benchmark S&P index has more than quadrupled since the lows of March 2009.

Markets are likely to be whipped around in coming months by the outlook for mid-term US elections in November, the probe of Russian meddling in the 2016 US election, and the Fed’s monetary policy, said Phil Orlando, chief equity strategist at Federated Investors in New York.

With the next earnings season two months away, an information vacuum on corporate fundamentals could lead stocks to decline 5% to 8%, Orlando said. “The potential for an air pocket here is pretty good,” he said.

MSCI’s gauge of stocks across the globe gained 0.30% and its emerging-market index rose 0.51%. In Europe, the pan-regional FTSEurofirst 300 index closed up a preliminary 0.04%. At midday, the Dow Jones Industrial Average fell 5.87 points, or 0.02%, to 25,816.42; the S&P 500 gained 3.94 points, or 0.14%, to 2,866.9; and the Nasdaq Composite added 32.15 points, or 0.41%, to 7,891.32.

The dollar index fell 0.12%, with the euro up 0.19% to $1.1591. The yen weakened 0.24% against the greenback at ¥110.57.

Benchmark US treasury 10-year notes rose 5/32 in price to yield 2.8279%. Oil hit a two-week high above $74 a barrel as an industry report showed a sharp drop in US crude inventories and US sanctions on oil cartel Opec producer Iran pointed to tighter supplies. Brent crude, the international benchmark, rose $1.72 to $74.35 a barrel. US crude gained $1.79 to $67.63.

Oil also found support from the weaker dollar, which makes oil less expensive for buyers using other currencies. The prospect of a drop in oil exports from Iran, the third-largest producer in Opec — in response to new US sanctions — was also supporting the market.

Reuters