Investing.com - Top 5 things that rocked U.S. markets this week
1. US Stocks Nurse Weekly Loss Despite White House Attempts to Ease Trade War Fears
Trading in U.S. stock markets this week was dominated by turmoil in Washington and rising fears over the prospect of a global trade war.
President Donald Trump’s decision to oust Rex Tillerson – over a disagreement on the Iran deal – drew widespread fear that the White House was dissolving into chaos as it was just a week ago that Gary Cohn resigned as President Donald Trump’s top economic advisor.
The turnover of top aides in Trump’s administration has made history – So far, in the 14 months of his presidency, more than 20 senior administration staffers have either been fired, resigned or reassigned. White House chief of staff, John Kelly, was feared to be latest to resign from the Trump administration but after talks Thursday with Trump, the two reportedly reached a “truce.”
Larry Kudlow – Gary Cohn’s replacement as chief economic advisor – did little to ease fears of a trade war, asserting that China “has earned a tough response not only from the United States”.
The White House, however, attempted to quell fears over a global trade war as it said Friday Trump was working with a number of counties over the possibility of providing exemptions on new U.S. tariffs on steel and aluminium imports.
The ebbs and flows of trade war angst were played out in Boeing (NYSE:BA) – heavily reliant on China demand for its aircrafts – as its share price suffered its worst week in two years.
The Dow ended the week nursing a loss despite closing more than 100 points higher on Friday.
2. WTI Crude Late Rally Delivered Weekly Win
Crude oil prices were on track for a weekly slump were it not for a late rally Friday. Some said the rally was on the back of rising geopolitical uncertainty which could lead to a disruption in global supplies amid reports Saudi Arabia is threatening to acquire nuclear weapons to counter the perceived Iranian threat.
That overshadowed investor fears of rising U.S. shale output which followed a trio of bearish reports from OPEC, the International Energy Agency and Energy Information Administration.
OPEC raised its growth forecast for non-OPEC production in 2018 by 280,000 barrels a day (bpd) to 1.66 million bpd this year, warning that non-OPEC supply growth, led by the U.S., will outstrip growth in global oil demand in 2018.
On Friday U.S. crude futures rose $1.16 to settle at $62.41 a barrel.
3. The Dollar Notched Weekly Win as Traders Eyed FOMC Rate Decision
The dollar notched a weekly win against a basket of major currencies as traders continued to bet that the Federal Reserve will raise its benchmark rate next week, March 21.
While many believe that the Federal Reserve’s March rate hike has been priced in, the central’s bank’s rate-hike projections or so-called dot-plots – illustrating where individual FOMC members believe rates are heading – are expected to be shifted upward, pointing to a faster pace of rate hikes.
TD Securities said it expects Fed officials to sound more upbeat at the March FOMC meeting with the “balance of risks now skewed to the upside.”
According to Investing.com’s Fed rate monitor, traders see a 93% chance the Federal Reserve will hike rates by 0.25% to a range of 1.50% to 1.75%.
4. Gold’s Glitter in Fed’s Pocket
Gold prices ended week nursing heavy loss as traders appeared reluctant to purchase the precious metal ahead of Federal Reserve’s widely expected interest rate hike next week.
The yellow metal’s brief forays higher on safe-haven demand amid Washington turmoil and trade war angst were used as selling opportunities. Data on Friday confirmed the negative turn in sentiment on gold prices as traders slashed their bullish bets on gold by the most in six weeks.
CFTC COT data showed money managers reduced their net long positions in gold futures to 167,900 lots from 183,800 lots for the week ended March 16.
5. Bitcoin: Bears in Control
Bitcoin added to losses sustained in the previous week despite rebounding from a slump below $8,000 Friday as regulators and private companies continued to stifle cryptocurrency activity.
Google become the latest company to introduce measures aimed at curbing cryptocurrency activity as the search-engine giant said it would ban crypto-related ad content. Facebook adopted a similar measure in January.
This comes a month after major banks across the US and UK halted cryptocurrency purchases on credit, striking a better blow to investors, who use credit cards to fund their cryptocurrency investment. This usually involves exchanging some form of fiat currency – currency that a government has declared to be legal tender – for a funding digital currency like Bitcoin or Ethereum.
On the regulatory front, meanwhile, IMF chief Christine Lagarde called for a crackdown on bitcoin, insisting the same technology that powered cryptocurrencies could be used to help regulate them.
Bitcoin fell 6% over the past seven days, hitting a low of $7,666.3, while Ripple XRP fell 15.85% over the same period, hitting a low of $0.62800 on the poloniex exchange.
Ethereum fell under $600 for the first time since February 6 before rebounding but was set to end the week down 13%