Global stocks joined declines in bonds and commodities as a selloff in emerging markets deepened with traders parsing the implications of a Donald Trump presidency for the world’s largest economy.
The MSCI All Country World Index pared its biggest weekly rally since September, the S&P 500 Index halted a four-day gain, while the Dow Jones Industrial Average hit a record high. A rout in Latin American markets extended into a third day on bets that higher U.S. interest rates would damp the appeal of riskier assets around the world. The dollar rose to its strongest level since February. Bonds continued to get pounded, with losses exceeding $1 trillion this week, and trading in Treasuries closed for a holiday. Gold and oil slumped.
Global stocks gained $1.3 trillion this week as traders bet Trump will lower taxes, ease corporate regulations and ramp up spending to spur growth. Meanwhile, investors pushed down the value of bonds as the policies are seen boosting inflation and interest rates. Federal Reserve Vice Chairman Stanley Fischer said the central bank has almost reached its goals for maximum employment and price stability, strengthening the case for a hike.
The S&P 500 fell 0.1 percent to 2,164.45, while still posting its best week in two years. The Dow Average rose 0.2 percent. The Russell 2000 Index of smaller companies rallied on speculation Trump’s homeward-looking policies will favor the more domestic-focused index.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was off 1.1 percent having suffered its lowest close since mid-July on Friday.
Reference: Reuters, Bloomberg
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