Friday 14.37 BST
What you need to know
- Pound rises after May comments in Brussels
- US stocks, dollar and Treasury yields rise as US Senate passes budget blueprint
- Pound rises after May comments in Brussels
- Hong Kong stocks recover ground after turbulence on Thursday
Overview
The US dollar built on earlier gains as Wall Street opened higher on Friday, after the Senate late on Thursday passed a budget blueprint that would help push forward the Republican party’s planned $1.5tn tax cut package.
Hot topic
The pound was stronger on Friday afternoon, reversing earlier losses against a stronger dollar, after comments from Theresa May in Brussels on Brexit developments.
The currency initially fell in early trading, but by early afternoon trading was slightly higher at $1.3169 after Mrs May’s press conference in Brussels following a summit with leaders of the other 27 EU countries.
Mrs May said Britain would go through its financial obligations to the EU “line by line” in comments that were interpreted positively by currency markets.
The British currency has gained over recent months on expectations of a November rate increase, but Jon Cunliffe, the Bank of England’s deputy governor, said it was not clear that interest rates needed to rise soon.
Despite the slight gains, analysts have expressed concerns over the vulnerability of the pound in light of the dollar’s rise.
“$1.30 is a huge level for the pound and a fall below that level would re-highlight fears over uncertainty levels towards the UK economy,” said Chris Bailey, European strategist at Raymond James.
Equities
Wall Street opened higher, with the S&P 500 adding 0.3 per cent. The Dow Jones Industrial Average rose 0.3 per cent. The two indices had hit fresh record closes despite a slide in Apple stock on Thursday.
European stocks were also firmer on Friday, with the Stoxx 600 0.2 per cent higher by mid-morning in Europe. Germany’s Dax index added 0.1 per cent.
The advances came as Asian equities were broadly firmer on Friday after a turbulent day on Thursday. Hong Kong’s Hang Seng index closed up 1.2 per cent after closing 1.9 per cent lower in the previous session, on the back of comments from China’s central bank chief that the country’s fast-growing economy faced a possible “Minsky moment”.
Currencies and fixed income
The dollar index, which measures the greenback against a basket of key currencies, rose 0.4 per cent to 93.591, pushing higher as Wall Steet opened. The yen lost 0.8 per cent to ¥113.4 against the dollar, hitting its weakest level since July.
The euro dropped 0.5 per cent against the dollar to $1.1789.
In European bond markets, the German 10-year Bund yield added 6 basis points to 0.45 per cent. Ten-year gilt yields rose 4 basis points to 1.32 per cent.
Yields on 10-year US Treasuries added 6 basis points to 2.38 per cent — their highest level this week. The moves came as markets continued to await US president Donald Trump’s decision on the next chair of the Federal Reserve, which he is expected to make before he travels to Asia on November 3.
Commodities
International benchmark Brent crude fell 0.2 per cent to $57.13 a barrel, reversing gains in earlier trading. US marker West Texas Intermediate fell 0.4 per cent to $51.07 a barrel.
Gold was hit by a stronger dollar, slipping 0.6 per cent to $1,281.66 an ounce.
Additional reporting by Alice Woodhouse in Hong Kong
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