The dollar registered its worst week in nearly four months last Friday, trounced by sterling and the ongoing rallies brought by the deal on Britain’s exit from the European Union. Meanwhile, China’s smallest registered growth in almost three decades scaled on equities.
The dollar slinked slower than the euro as the former benefited from the lift it got from hopes that the Brexit agreement could raise the possibilities of the eurozone dodging a recession. Dismaying production data and fears that the U.S.-China trade conflict would slack off economies in Europe also slammed the euro the current year. Worries of a disoriented Brexit rattled sterling in the previous week.
Paul Mendelsohn, the chief investment strategist in Vermont-based Windham Financial Services, said that they could easily distinguish what’s driving the euro, which the possible Brexit deal. Mendelsohn added that they are going to know this coming weekend, whether it will be a reality or a mere pipe-dream.
The euro raised 0.36% to a nearly two-month high at $1.1162. Sterling rose 0.42%, its highest in the past five months at $1.2942.
Boris Johnson, the British Prime Minister, dazed his opponents after notching a new agreement with the EU last Thursday, even after the bloc has assured that it would make any deal as agreed on the treaty established the previous year.
Parliament will vote on the deal this Saturday, which may result in British-linked businesses shares, such as retailers and housebuilders, to skyrocket in their record highs once approved. Investors anticipate that the pound would rise by 5%.
CMC Markets chief market analyst, Michael Newson, said that while the parliament members cast their vote, Brexit drama is unlikely to end. Newson said that if MPs, indeed, vote for the deal, what’s next is moving to phase 2 and discussing the new relationship set to happen in the 14-month transitional period.
Dismal earnings data from French food group Danone and carmaker Renault shares resulted in lower European shares. Negative headlines about Boeing and Johnson & Johnson on Wall Street Journal counterbalanced the positive corporate earnings in the U.S.
MSCI’s measure of stocks worldwide (.MIWD00000PUS) dropped 0.24%. The FTSEurofirst 300 index (.FTEU3) of top European shares finished at 0.38%.
Bleak economic data in China also affected risk appetite as it drove down the.CSI300, the Shanghai Shenzhen index, by 1.2%.
Asian stocked plummeted after China’s growth in the third quarter slacked off more than what was anticipated to its weakest movement in nearly three decades as U.S. trade conflict affects factory output. China’s GDP increases by 6.0% each year.
WSJ also fringed lower on fears of Chinese GDP data’s effect on the global economy and after J&J decided to recall one batch of its baby powder product.
J&J shares plunged 6.2% while Boeing fell 6.79% after it gave messages to two employees from 2016, suggesting that the airplane manufacturer, may have misled aviation officials from the U.S. regarding a critical safety mechanism on the Boeing 737 MAX.
Meanwhile, significant earning from Schlumberger NV and Coca-Cola Co, among others, helped offset the losses. Schlumberger rose by 1.32%, while Coke increased by 1.84%.
The .DJI (Dow Jones Industrial Average .DJI) dropped by 0.95%, or 255.68 points, to 26,770.2. The .SPX (S&P 500) dove 0.39%, or 11.75 points, 2,986.2. Lastly, the .IXIC (Nasdaq Composite) lost 0.83%, or 67.31 points, to 8,089.54.
Bond yield in the euro zone increased a day before the voting on the Brexit deal. Generally, the yields went higher since the British and the Irish leaders announced the previous weeks that they found a path to an agreement, raising risk appetite and diminishing demand for safe-bound assets like bonds.
The 10-year Bund yield of Germany dropped 0.39% DE10YT=RR last Thursday, after notching its highest record since late July.
Treasury yields in the U.S. also plunged as investors anticipate Saturday’s Brexit deal result, with the 10-year U.S. Treasury note benchmark up by 1/32 in cost to drive returns down by 1.7501%.
Concerns on China’s economy affected oil prices more than the bullish signals coming from the refining sector. LCOc1, the Brent crude oil futures benchmark, dropped 49 cents to $59.42 each barrel. Meanwhile, the CLc1, U.S. West Texas Intermediate oil futures, dove 15 cents to end at $53.78 each barrel.
Gold was stable, guided by the weaker dollar. GCv1, U.S. gold futures, finished 0.3% weaker at $1,494.10 per ounce ounce.