It has been a mixed start for European equities so far this morning, although most of the indices have recovered from an early mark-down. The main feature of Monday’s trade had been initial dollar weakness which came as a reaction to the communique at the end of this weekend’s G20 meeting. Investors were taken by surprise after global finance ministers appeared to bow to pressure from the US and dropped their commitment to oppose protectionism. It is felt that this could usher in an era of tariffs, stricter border controls and less free trade which can only result in more expensive goods, less cooperation and ultimately dampen global growth.
The dollar has made back some of its early losses although the Dollar Index has spent most of the morning below 100 - trading at 6-week lows. Meanwhile, gold and silver continue to build on gains made from last week. Both metals flew higher following Wednesday’s Fed meeting. The FOMC’s Summary of Economic Projections was viewed as less hawkish than expected, being effectively unchanged from December. The consensus expectation was that the Fed would indicate it was prepared to hike rates by 100 basis points in 2017, up from the 75 indicated at the end of last year.
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