European stocks, dollar rally tracking Trump

London / AFP

European stock markets rallied on Monday and the dollar surged to multi-month highs, with traders shrugging off concerns over the Trump presidency and weak Chinese economic data. In foreign exchange, the euro struck a ten-month low at $1.0728, while the dollar reached also a five-month peak versus the yen.
“European shares are trading higher… despite disappointing Chinese industrial production and retail sales data,” said Markus Huber, a trader at City of London Markets. “It appears that the fact that president-elect Trump might not be quite as radical and confrontational as some had feared and therefore generally less uncertainty making the rounds is pushing stocks higher for now.”
Equities around the world have seen volatile trading since the tycoon’s shock election win last week, with his pledge of big-spending measures and tax cuts leading to predictions of a surge in inflation and higher borrowing costs. The prospect of better and safer returns in US has also led to an exodus from emerging markets and currencies, while the Mexican peso has hit record dollar-lows owing to concerns about Trump’s warning he will tear up a key trade deal. Around 1030 GMT, London’s benchmark FTSE 100 was 1.1-percent higher compared with close on Friday. Frankfurt’s DAX 30 jumped 0.9 percent and the Paris CAC 40 rallied 1.2 percent. Tokyo’s Nikkei ended up 1.7 percent, with exporters rallying on the back of the weakened yen. The dollar reached 107.96 yen, the highest mark since early June.
Japanese stocks were lifted also by news that Japan’s economy grew more than expected in the third quarter as exports offset slack consumer spending. Shanghai put on 0.5 percent despite data showing below-forecast retail sales and industrial output for October. However, Hong Kong sank 1.4 percent, extending a heavy loss on Friday, while Seoul and Sydney each shed 0.5 percent and Singapore fell 0.9 percent. Manila dived 1.5 percent and Jakarta was 1.8 percent lower, with dealers concerned Trump’s protectionist rhetoric could see him ramping up tariffs.
Elsewhere, “Asian currencies continue (to come) under almost universal pressure… as traders bet that an isolationist and protectionist presidency could harm the region”, said Greg McKenna, chief market strategist at trading firm AxiTrader. Mexico’s stock market and the peso have meanwhile been hurt by fears Trump will follow through on campaign pledges to renegotiate the North American Free Trade Agreement, as well as pressure the country to pay billions of dollars for a giant border wall. Oil prices remained under pressure after OPEC said last week it pumped a record amount of the commodity in October, while dealers are worried the producers’ cartel will not be able to implement an earlier agreement to cut output.