US, European stocks tumble, dollar gains

London / AFP

Europe’s main stock markets extended their losses on Wednesday after recent volatile swings and US stocks turned lower after a week-long post-election rally while the dollar surged.
“US stocks look set for a lower open with the future Donald Trump presidency still front and centre,” analyst Jasper Lawler, of CMC Markets, said in a note to clients.Wall Street opened lower as investors also digested new results from major retailers ahead of the approaching holiday shopping period. The dollar hit a 13-year high against a basket of currencies Wednesday.
“Even before the election, the greenback’s fundamental picture was brightening, helped by the US economy’s strongest growth in two years last quarter when it grew nearly 3 percent,” senior market analyst Joe Manimbo, of Western Union Business Solutions, said in a note to clients. “Quicker growth was supportive of the Federal Reserve raising rates this year.
“Now with a new administration coming to Washington next year, the world’s top economy appears poised to receive a meaningful tailwind in the form of fiscal stimulus and tax cuts.”
In turn, Paris, Frankfurt and London all sunk deeper into the red after slight losses earlier in the session. All three had marched higher Tuesday on rising oil prices.
Analyst Markus Huber at City of London Markets said that, with little data in Europe, traders were focused on fresh US figures, including on industrial production and producer prices.
London investors also digested official data showing that Britain’s jobless rate dipped to an 11-year low of 4.8 percent in the three months to September.
Energy firms led a rally in many Asian markets on Wednesday after oil prices soared on hopes for a deal by producers to cut output. Wall Street had advanced Tuesday as the Dow Jones Industrial Average gained for the seventh day — including four straight record closes — with energy and tech stocks also following oil higher. Commentators said the cheerful mood in New York was partly an extension of the post-election rally following the surprise victory of Donald Trump, who has pledged to slash taxes and boost spending.
“There is a clear distinction between US and European markets, as the Trump-fuelled excitement evident over the pond is perhaps somewhat lost closer to home,” noted IG analyst Joshua Mahoney.