US Dollar and Stock Futures Gain as Focus Shifts to Fed Moves

Dollar and equity bulls found little cause for concern in Donald Trump’s address to Congress despite a lack of details, allowing investors to turn their focus on the timing of a U.S. interest-rate hike.

The Bloomberg Dollar Spot Index briefly pared gains while Trump spoke on Tuesday night in the U.S., only to rebound after he finished. S&P 500 futures slightly trimmed a pre-speech advance. The yield on 10-year Treasuries rose, adding to earlier gains after odds jumped for a Federal Reserve rate increase this month. The yen dropped for a third day, spurring a rally in Japanese equities, while gold slumped.

The odds of an increase in March for U.S. interest rates rose to more than 60 percent, pushing up the dollar and dragging Treasuries lower. Federal Reserve Bank of New York President William Dudley said the case for tightening has become a lot more compelling. Fed Bank of San Francisco President John Williams said he expects a rate increase to receive “serious consideration” at this month’s meeting.

Traders sifted through a parade of other news on Wednesday in Asia before the U.S. president’s address. China’s official factory gauge firmed in February as producer prices rebounded. The Australian dollar erased an early decline as the nation’s economy grew faster than expected.

Trump in his speech urged Americans to abandon conflict and help him remake the fabric of the country, a moment he hopes will turn the page on his administration’s chaotic beginning and bring clarity to his policy agenda. He offered few new proposals and Trump made no suggestions on how he would pay for his plans, including a replacement of Obamacare, a tax overhaul including cuts for the middle class, $1 trillion in infrastructure investment and a large increase in defense spending.


Here are the main moves in markets:

Currencies

· The Bloomberg Dollar Spot Index rose 0.4 percent as of 3:24 p.m. in Tokyo, climbing for a fourth straight day. The yen slid 0.6 percent to 113.48 per dollar, for a third day of losses.

· The Aussie dollar increased 0.1 percent, after reversing an earlier decline of 0.3 percent. The country’s gross domestic product expanded 1.1 percent in the fourth quarter, higher than estimates for 0.8 percent growth, as households saved less and spent more.

Stocks

· Futures on the S&P 500 Index rose 0.2 percent, after climbing as much as 0.4 percent before Trump’s speech. The benchmark index finished February with its best monthly gain since March, climbing 3.7 percent.

· Japan’s Topix index increased 1.2 percent. The gauge completed a fifth straight monthly advance in February, the longest winning streak since early 2015.

· The Stoxx Europe 600 Index added 0.2 percent after four straight days of losses.

· Hong Kong’s Hang Seng climbed 0.1 percent and the Shanghai Composite Index added 0.2 percent. China’s manufacturing data gives top officials gathering in Beijing a solid economic backdrop as they seek to rein in financial risks.

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