Thursday 25th January 2018
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The US dollar dropped while Wall Street fell, giving up gains that had pushed the benchmark stock indexes to record highs earlier in the day, after US Treasury secretary Steven Mnuchin encouraged a weaker greenback.
"Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told reporters in Davos, Bloomberg reported. The currency’s short term value is "not a concern of ours at all,” he said.
"Longer term, the strength of the dollar is a reflection of the strength of the US economy and the fact that it is and will continue to be the primary currency in terms of the reserve currency," Mnuchin said, according to Bloomberg.
The greenback slid to the lowest level in three years.
“I don’t ever recall a Treasury official commenting openly like this—verbal intervention aimed at making a weak currency even weaker,” Gluskin Sheff & Associates’ chief economist and strategist David Rosenberg said in a note, Bloomberg reported. “He just put a bull’s-eye on the forehead of the beleaguered greenback in the hope that this currency depreciation, like all the hikes in tariffs and import duties under this administration, will bring jobs back to America.”
Meanwhile, comments from US Commerce Secretary Wilbur Ross signalled further moves by the Trump administration towards protectionist polices.
In 1.27pm trading in New York, the Dow Jones Industrial Average slid 0.3 percent, while the Nasdaq Composite Index dropped 0.9 percent. In 1.12pm trading, the Standard & Poor’s 500 Index declined 0.4 percent.
Earlier in the session the Dow touched a record high, as did the S&P 500 and the Nasdaq.
The Dow fell as slides in shares of General Electric and those of Intel, recently down 3.2 percent and 2.3 percent respectively, outweighed gains in shares of Verizon and those of Nike, recently up 1.5 percent and 0.8 percent respectively.
In the latest deal news, shares of CanniMed soared, trading 15.6 percent higher as of 12.27pm in Toronto, after Canada’s Aurora Cannabis agreed to buy its rival in a deal valued at about C$1.1 billion (US$852 million), concluding protracted takeover negotiations.
"We are very pleased to have come to terms with CanniMed on this powerful strategic combination that will establish a best-in-class cannabis company with operations across Canada and around the world," Terry Booth, CEO of Aurora, said in a statement.
Shares of Aurora Cannabis traded 1.4 percent weaker.
“The action is where the medical cannabis export markets are, which are much larger than Canada,” Chris Damas, editor of the BCMI Cannabis Report, told Reuters. “CanniMed has patents, they have relationships with different universities, research and clinical trials, and export relations with other countries, and Aurora wants to add to their own relationships in Europe.”
In Europe, the Stoxx 600 Index ended the day with a 0.5 percent decline from the previous close. The UK’s FTSE 100 index dropped 1.1 percent, while Germany’s DAX Index also shed 1.1 percent, and France’s CAC40 Index fell 0.7 percent.
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