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Trade stress, Iran tensions hit stocks, dollar frets on Fed pigeons



LONDON (Reuters) – The European shares were spooked by Iran tensions and trading jitters on Tuesday, while the risk of more tough talk from the Federal Reserve blew gold to six years high and stoked demand for safe-harbor currencies such as the Yen and Swiss francs. .

FILE PHOTO: An investor monitors stock quotes at a brokerage office in Beijing, China July 6, 2018. REUTERS / Jason Lee

Under a dramatic step to increase the pressure on Iran, US President Donald Trump signed the order on Monday to impose sanctions against top head Ayatollah Ali Khamenei and other senior officials.

The movement is a further concern for investors eager to see if anything comes from Chinese-US trade negotiations later this week, with feelings that didn't help after a senior US official said President Donald Trump would be happy with "something outcome "from trading conversations with China.

The pan-European STOXX 600 index fell 0.3%, with the technology sector leaping on the back of Capgemini's engineering and digital service company Altran for 3.6 billion ($ 4.10 billion).

Capgemini shares rose 7% and those in rival SAP SE 0.3%, pushing the sector around half a percent up. Altran increased 21%.

"Our view is that the markets due to the very high global uncertainty market have become very demanding and can move far on not much news as Trump's meeting with Xi on the G20," said Gerry Fowler, global multi-asset strategist at Aberdeen Standard Investments.

"At the moment, the data looks good, but the mood is deteriorating and we expect it to continue in the second half of the year," he added.

Trump is slated to meet the one-on-one with at least eight world leaders at the G20 Summit in Osaka, including China's President Xi Jinping and Russian President Vladimir Putin

Chinese investors did not seem to be hopeful as Shanghai blue chips fell 1%, leading to the MSCI's widest Asia-Pacific index shares outside Japan down 0.4%.

Japan's Nikkei lost 0.4%, while S & P 500 e-minis dropped 0.2%.

FED SPEAKERS

There are no fewer than five Fed makers talking on Tuesday, including St ol Jerome Powell and the markets assume they will stick to the recent bold message.

"It is always possible that the chair can go back to some of the market's poor interpretation of last week's FOMC meeting … but we suspect he will strengthen the message that was posted last week," Kevin Cummins said. senior American economist at NatWest markets.

"At the end of July, we believe the Fed will have seen enough to decide that measures to counter downward economic risks and low inflation / inflation expectations are justified and we are looking for a 25 basis point cut at the next FOMC meeting."

Markets go well beyond that. Futures are fully priced for a quarter-point relief and involve around a 40% chance of a half-point move.

In mid-2020, there are a total of 100 cuts, a main reason why two-year returns are well below cash of 1,715%.

GOLD SOARS

Dividends on 10-year government bonds have dived 120 basis points since November and, at 1.99%, almost returned to where they were before Trump was selected at the end of 2016.

German 10- The annual bottom dividend hit a new record low of 0.332%, down 2 basis points a day.

The dollar has fallen in four consecutive sessions against a basket of other currencies to remain at a three-month low of 95,989.

"USD DXY is now likely to break through March made at 95.76 and below 95.0," said Tapas Strickland, a marketing director at NAB.

"The drivers here continue to increase expectations for Fed cut rates – now 3.1 cuts priced after the turn of the year," he said, noting that a number of index tracks showed data flow from the US now turned out to be more disappointing than Europe.

The euro hit a three-month high of $ 1.11412, having gained 2.0% from a two-week low of $ 1.181, a week ago when the dollar lost steam. It last stood at $ 1,1396.

Towards the marina, the dollar hit its lowest since the January 106 collision. Dealers also noted a Bloomberg report that Trump had privately mourned to end the post-war defense law with Japan.

Against the Swiss franc, the dollar fell to its lowest for nine months and was last at 0.9755.

Withdrawn in dollars combined with lower global returns lit a fire under gold, affecting a six-year peak. The metal is up 12% in the last month of $ 1,1433.16 an ounce. [GOL/]

Oil prices lost some ground on Tuesday, having risen sharply last week in response to tensions between the US and Iran. [O/R]

Burnt raw futures eased 0.4% to $ 64.58 while US crude fell 0.3% to $ 57.75 per barrel.

Further reporting by Wayne Cole in Sydney; Editing by Keith Weir

Our Standards: Thomson Reuters Trust Principles.

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