Protectionism worry drags on stocks, dollar hits six-week low

Mon Mar 20, 2017 4:27pm EDT
 
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By Sam Forgione

NEW YORK (Reuters) - The U.S. dollar slumped to a six-week low on Monday on worries over a dovish Federal Reserve, while U.S. and European stock markets dipped amid concerns about G20 financial leaders' decision to drop a pledge to keep global trade free and open.

The dollar index .DXY, which measures the greenback against a basket of six major currencies, was flat at 100.32 after touching its lowest since Feb. 7 of 100.020. The index extended last week's weakness following recent interest-rate guidance from the U.S. Fed that was less hawkish than many had expected.

Caution prevailed over U.S. and European stock markets after financial leaders of the world's biggest economies made only a token reference to trade on Saturday, acquiescing to an increasingly protectionist United States after a two-day G20 meeting failed to yield a compromise.

European stocks closed modestly lower on the day, with a 3.7-percent fall in Deutsche Bank (DBKGn.DE: Quote) shares hurting banking stocks.

Worries that Trump's plan to cut taxes and boost the economy could take longer than previously expected also weighed on U.S. shares Monday. Still, the benchmark U.S. S&P 500 stock index is up more than 11 percent since the election of U.S. President Donald Trump in November, spurred by optimism over his plans to reform the tax code and cut regulation.

"It's just one more day delaying talking about policy," said Ian Winer, director of trading at Wedbush Securities in Los Angeles. "The market wants tax reform, and you need to get healthcare done before you get tax reform."

The tech-heavy U.S. Nasdaq Composite index briefly bucked the trend and hit a record intraday peak of 5,915.120 before easing from that high.

MSCI's all-country world equity index was last down 0.16 points, or 0.04 percent, at 451.1 .MIWD00000PUS.   Continued...

 
Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., March 20, 2017.  REUTERS/Lucas Jackson