London (AFP) – Stock markets fell and gold hit a record high Tuesday as investors fled to safe havens over concerns about US President Donald Trump’s Federal Reserve fight, tariffs uncertainty, and Europe’s public finances. Wall Street’s main indexes opened sharply in the red as investors returned from the Labor Day holiday, while European stock markets lost significant ground at the close. The borrowing costs of the United States, France, and Britain rose as the yield on their sovereign bonds jumped.
Frankfurt’s DAX index shed 2.3 percent — albeit still showing an 18 percent rise for the year to date — while London lost 0.9 percent. “September can be a strange month for financial markets, as stocks historically tend to underperform,” noted Kathleen Brooks, research director at XTB traders. “However, a selloff in the bond market and a rush to the dollar and gold are signs that investors are rushing into safe havens and liquid assets,” she added. Chris Beauchamp, chief market analyst at investing and trading platform IG, said “markets often see a burst of volatility after US holidays, but today seemed to have something more about it, as European markets nose-dived in early trading and bond yields continued to rise.”
Gold reached $3,501.59 an ounce Tuesday, beating its previous record of $3,500.10 in April. In the United States, investors were watching developments in Trump’s bid to oust Fed Governor Lisa Cook, with a court hearing her challenge on Tuesday. The case has major implications for the US central bank and its independence. “Investors are increasingly concerned about President Trump’s interference with the running of the US Federal Reserve,” said David Morrison, senior market analyst at financial service firm Trade Nation.
Analysts also cited concerns over Trump’s tariffs campaign after a court on Friday ruled that many of his duties were illegal because he did not have authority to impose them. The court, however, allowed the tariffs to stay in place through mid-October, allowing the parties to take the case to the Supreme Court. “This combination of tariff uncertainty, Fed concerns, and seasonal weakness left markets on edge as the month began,” Morrison said. The yield on 30-year Treasury bonds rose to almost five percent.
The dollar, however, rallied against the euro and British pound as French and UK government borrowing costs hit multi-year highs. France’s long-term borrowing cost jumped to its highest level since the eurozone debt crisis in 2011 as investors fret over a confidence vote next week that could topple the minority government. The yield on 30-year government bonds topped 4.5 percent ahead of Monday’s vote, which was called by Prime Minister Francois Bayrou to settle a budget fight but which he is tipped to lose. The yield on 30-year UK government bonds hit the highest level since 1998 owing to worries over Britain’s struggling economy.
Elsewhere, oil prices soared on stalled peace negotiations between Ukraine and major energy producer Russia, according to analysts. On the corporate front, shares in Nestle retreated around 0.7 percent after the Swiss food giant sacked chief executive Laurent Freixe, citing an undisclosed romantic relationship with a direct subordinate.
– Key figures at around 1545 GMT –
New York – Dow: DOWN 1.2 percent at 45,022.10 points
New York – S&P 500: DOWN 1.3 percent at 6,380.79
New York – Nasdaq: DOWN 1.6 percent at 21,119.80
London – FTSE 100: DOWN 0.9 percent at 9,116.69 (close)
Paris – CAC 40: DOWN 0.7 percent at 7,654.25 (close)
Frankfurt – DAX: DOWN 2.3 percent at 23,494.74 (close)
Tokyo – Nikkei 225: UP 0.3 percent at 42,310.49 (close)
Hong Kong – Hang Seng Index: DOWN 0.5 percent at 25,496.55 (close)
Shanghai – Composite: DOWN 0.5 percent at 3,858.13 (close)
Euro/dollar: DOWN at $1.1664 from $1.1705 on Monday
Pound/dollar: DOWN at 1.3390 from $1.3547
Dollar/yen: UP at 148.22 from 147.27 yen
Euro/pound: UP at 87.11 pence from 86.57 pence
Brent North Sea Crude: UP 1.1 percent at $68.88 per barrel
West Texas Intermediate: UP 2.0 percent at $65.34 per barrel
© 2024 AFP
