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GLOBAL MARKETS-U.S. stocks slide, dollar drops as Trump optimism wanes

Published 2017-01-12, 11:52 a/m
© Reuters.  GLOBAL MARKETS-U.S. stocks slide, dollar drops as Trump optimism wanes
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(Adds comment, updates prices, changes dateline; previous LONDON)

* Dollar slips, bonds rally after Trump short on stimulus

* Healthcare stocks in Europe drop 2 percent after Trump

* Oil consolidates after bounce, gold hits 7 week high

By Gertrude Chavez-Dreyfuss

NEW YORK, Jan 12 (Reuters) - Wall Street stocks fell nearly 1 percent and the U.S. dollar dropped to a five-week low on Thursday after President-elect Donald Trump's eagerly awaited news briefing the previous day ignored his fiscal policies, which are expected to boost the economy.

Investors were hoping for commentary on the new administration's plans for fiscal stimulus and tax cuts. Instead, Trump remarked on a broad range of topics such as the Mexican wall, allegations of Russian hacking and his business interests but left out what investors wanted to hear about - fiscal spending.

"The lack of focus in Mr. Trump's first press conference since winning the election fanned worries about the president-elect's willingness or ability to drive a pro-growth agenda once in office," said Omer Esiner, chief market analyst, at Commonwealth Foreign Exchange in Washington.

In late morning trading, the Dow Jones Industrial Average .DJI was down 157.13 points, or 0.79 percent, at 19,797.15, the S&P 500 .SPX fell 16.5 points, or 0.725173 percent, to 2,258.82 and the Nasdaq Composite .IXIC lost 53.70 points, or 0.97 percent, to 5,509.95.

The dollar, meanwhile, hit a five-week trough against a basket of major currencies and was on track for its worst week since November. The dollar index .DXY , which measures the greenback against six major currencies, last traded down 0.7 percent at 101.04. The dollar slid to a five-week low versus the yen and last traded down 1.3 percent at 113.91 yen JPY= .

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Trump did not mention tariffs against Chinese exports, a relief for Asian markets fearing the outbreak of a global trade war. But there was more pain for the dollar as the euro drove higher on ECB minutes showing a split over stimulus. President-elect's lack of policy detail also put safety plays such as bonds and gold back in favor. and the retreating dollar brought relief for Brexit-bruised sterling GBP= and Turkey's lira TRY= .

Benchmark U.S. Treasury 10-year note prices rose 13/32, with the 10-year note yield US10YT=RR down at 2.321 percent. German 10-year yields, however, rose to 0.313 percent DE10YT=RR .

European shares .FTEU3 also fell, bucking gains in Asia overnight and weighed down by a 2 percent slump in healthcare stocks .SXDP after Trump had said pharmaceutical firms had been "getting away with murder" with their prices. .EU

FIRMER COMMODITIES

In commodity markets, oil was higher, bolstered by news that Saudi Arabia has cut oil output to its lowest in almost two years, according to its energy minister. The world's largest oil exporter leads OPEC's drive to eradicate a global glut and prop up prices. crude CLc1 was trading up 1.4 percent at $52.97 and Brent crude LCOc1 was up 88 cents at $55.98 a barrel, following gains of nearly 3 percent on Wednesday.

The weaker dollar also helped metals markets. Gold rose to a seven-week high just shy of $1,200 per ounce XAU= while London copper CMCU3 traded up almost 2 percent after electronic trading there was delayed by a five-hour outage. MET/

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The recently weak Chinese yuan CNY= also firmed 0.6 percent.

Asset management giant PIMCO said on Thursday it thought there was a chance Beijing could fully float the yuan this year.

"Over the year, our base case is for the yuan to decline against the U.S. dollar by a mid- to high-single-digit percentage," said Luke Spajic, PIMCO's head of Asian portfolios.

"However, we also think the possibility that the PBOC will allow the yuan to float freely, or at least widen its trading band, has increased."

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