Asia Stocks Point Lower as Davos Talk Roils Dollar: Markets Wrap

Asian shares are set to open lower Thursday after Trump administration official’s rhetoric on trade and the dollar roiled financial markets, sending the U.S. currency to its lowest level in three years and whipsawing stocks that had been buoyed by strong earnings.

The S&P 500 closed flat after swinging between gains and losses. The threat of tit-for-tat tariffs weighed on technology stocks and industrial shares also fell. Futures in Australia and Japan point to declines. The yen pushed through 109 per dollar and Treasuries dropped. Commodities surged, with West Texas Intermediate oil climbing above $65 a barrel for the first time in more than three years.

Treasury Secretary Steven Mnuchin’s endorsement of a weak dollar added to pressure on a greenback that’s been in decline for a year, although White House Press Secretary Sarah Sanders appeared to soften his comments later. The euro rose to the highest since 2014 as eyes turn to the European Central Bank’s policy meeting on Thursday, where traders will be looking for for further clues on its appetite for rolling back stimulus, and its officials’ thoughts on a strengthening currency.Investor focus on global trade has intensified after the U.S. officials’ comments added to President Donald Trump’s protectionist push days after his administration slapped tariffs on solar panels and washing machines. Commerce Secretary Wilbur Ross’s suggestion that the U.S. could enact more levies touched off concerns of a trade war that could hamper the synchronized global growth that’s sent equities around the world to all-time highs.

“To the extent that trade is disrupted, it’s probably not good for economies, for U.S. companies and corporations, and would probably put pressure on the rising stock market,” Michael Cuggino, president and portfolio manager at the Permanent Portfolio Family of Funds in San Francisco, said by phone. “I don’t think it’s a surprise that you have negative news that might be impacting the continuing march-up as people take a pause.”

Elsewhere, the Brazilian real strengthened the most in eight months and the Ibovespa stock exchange rose to a record after a panel of judges upheld the conviction of former President Luiz Inacio Lula da Silva on graft, a ruling that would prevent him from running in the general election