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Stocks edge lower as dollar stalls, oil advances

Cape Town - US stock index futures slipped and the dollar’s rally faltered after Donald Trump fired FBI Director James Comey. Oil climbed following an industry report that showed American stockpiles declining for a fifth week.

The greenback headed for the first drop in three days in the wake of Trump’s move, and after Federal Reserve Bank of Dallas President Robert Kaplan cast doubt on the pace of rate hikes in the world’s biggest economy.

Treasuries advanced, while gold ended the longest run of losses since October. Europe’s Stoxx 600 Index edged lower, with Roche the biggest laggard after a cancer drug failed in a late-stage clinical trial.

The weakness across most markets comes in the wake of gains that sent global stocks to a record. Trump’s dismissal of Comey may threaten to undermine his administration as it attempts to move tax and spending plans through Congress, just as political risks ease in Europe and corporate earnings suggest the global economy is on the mend.

“All in all, this does not support the view that the US Trumpflation trade faces an easy road ahead of it,” Michael Every, head of financial markets research at Rabobank in Hong Kong, wrote in a note. “It underlines that real surprises can pop up out of the box at any time right now.”

Here’s what investors will be scrutinizing:

Earnings are expected from companies including Deutsche Telekom and Snap, Toyota and SoftBank posted results after the close of Japanese markets. The Bank of England on Thursday publishes its interest-rate decision and quarterly Inflation Report.

Here are the main moves in markets:

Stocks

The Stoxx Europe 600 slipped 0.1% as of 12:55, after climbing 0.5% on Tuesday to the highest since August 2015. S&P 500 futures dropped 0.2%.

Currencies 

The Bloomberg Dollar Spot Index lost 0.2% after climbing 0.4% on Tuesday. The euro and pound were little changed at $1.0867 and $1.2940, respectively.

Bonds

The yield on 10-year Treasury notes fell three basis points to 2.37%.  Benchmark German yields dropped three basis points to 0.4%, while French yields were down four basis points.

Commodities

Gold gained 0.3% to $1 225.07 an ounce, rebounding from five days of declines. West Texas oil climbed 1% to $46.36 a barrel, resuming gains after dropping 1.2% on Tuesday. Copper erased earlier gains to trade 0.2% down at $5 504 a ton on the London Metal Exchange.

Asia

Hong Kong shares jumped to a 21-month high and Chinese stocks traded there also surged, even as equities in Shanghai resumed a selloff.  South Korean stocks dropped from an all-time high following Moon Jae-in’s presidential victory, while the won retreated as Pyongyang pledged to push forward with another nuclear test.

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