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Gold and Yen rally on EU, Trump concerns

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Lingering concern over Donald Trump’s policies and the U.K.’s position in the European Union accelerated a move toward safer assets, with rallies in gold and the yen stretching to a seventh day. Treasuries rose and Asian stocks fell with U.S. equity futures.

Chinese shares extended a rout to six days, their worst run in three years. The yen continued its longest streak since the run-up to the U.K.’s Brexit vote last year, sending Japan’s Topix down the most since November. The dollar fell against most major currencies before a speech by U.K. Prime Minister Theresa May in London where she will say that the U.K. is likely to pull out of the EU’s single market for goods and services and seek a completely new trading relationship with the bloc.

Stock investors are assessing whether the market has run too far during its two-month rally leading up to Donald Trump’s inauguration as U.S. president on Friday. About $3 trillion (£2.48 trillion) was added to the value of global stocks in that time as the dollar surged amid signs of inflation and growth picking up. The International Monetary Fund is taking a cautious stance toward Trump’s policies, assuming a modest boost to the U.S. economy from his promise of fiscal stimulus, and upgraded its growth forecast for China’s economy in 2017 to 6.5 per cent.

“We’ve had a strong rally in equities and we remain cautious,” said Niv Dagan, Melbourne-based executive director at Peak Asset Management LLC. “There is a bit of angst and nervousness leading up to Trump’s inauguration and on the U.K.’s position in Europe. We expect this volatility to continue in the near term.”

Paul

The author Paul