London edged a touch higher, with the FTSE index benefiting from gains to share prices of heavyweight mining companies on rising copper prices, traders said.
London’s FTSE 100 gained 0.1% to 7,671.53 points, Frankfurt’s DAX 30 lost 0.1% to 13,324.48 and Paris’s CAC 40 fell 0.1% to 5,521.59 points at close yesterday.
“After managing to staunch its bleeding last Friday, the dollar has continued to try and claw back the acres of ground lost in the last few months,” said Connor Campbell, an analyst at Spreadex trading group.
But some analysts suspected that the greenback was simply taking a breather before heading lower again.
“The dollar has started the new week on the front-foot,” said Fawad Razaqzada at Forex.com, but “the rise at the start of this week may very well be an oversold bounce rather than a trend reversal. After all, there has been no fundamental change to instigate a reversal in the dollar”.
Earlier yesterday, Asian stock markets ended down on profit-taking, as investors tracked last week’s record-breaking close on Wall Street.
The three major US indices all closed at record highs on Friday with earnings season in full swing, on the back of strong earnings announcements. But yesterday, Wall Street also ran into profit-taking after four straight weekly gains.
“US stocks are lower in early action, ahead of a busy week of economic and earnings data, while the global markets assess the rally that has carried over into 2018,” brokers Charles Schwab said in a note to clients.
But there is a good chance that the upward trend will resume, with major companies signalling higher profits in anticipation of tax cuts recently enacted in the US, analysts said.
With more earnings numbers expected this week – including from tech giants like Apple, Amazon, Facebook, Alibaba and Google’s parent company Alphabet – analysts say strong results could sustain the positive sentiment in the markets.
“A data-packed week and stock reporting seasons around the globe should see market focus turn to the numbers,” said Michael McCarthy, chief strategist at CMC markets in Sydney.
But he warned that a weak dollar “may prove a brake on any investor exuberance”.
The greenback remains under pressure after seemingly contradictory comments last week on its desired strength by US President Donald Trump and Treasury Secretary Steven Mnuchin.
The dollar could experience more turbulence with several major announcements coming up this week, including Trump’s State of the Union address today.
Markets could also be impacted this week by the outcome of a scheduled US Federal Reserve meeting.
The Fed is expected to leave the benchmark US interest rate untouched, but economists say the changing composition of the policy committee could point to faster rate rises in 2018 – especially if the dollar remains weak.
Industrial data from China and GDP figures from India are also expected this week.
London’s FTSE 100 gained 0.1% to 7,671.53 points as share prices of heavyweight mining companies rose on rising copper prices.