Euro scales 3-year dollar pinnacle on German deal hopes

NEW YORK: The European single currency surged Friday to a three-year peak against the dollar as German Chancellor Angela Merkel moved closer to a new coalition government.

The euro’s advance came as most global pushed higher, with again surging to fresh records as earnings season got underway amid optimism following tax reform.

Near 2140 GMT, (5.40 time) the euro was at US$1.22, (RM4.84) up 1.4% on news that Merkel’s conservatives have reached a “breakthrough” deal with Germany’s second biggest party, the Social Democrats, toward building a new coalition.

In the all-night negotiations in Berlin, Merkel and her Christian Democrats, Horst Seehofer of her Bavarian allies the CSU, and Social Democrats (SPD) chief Martin Schulz hammered out a 28-page paper that will form the basis for the talks ahead.

The euro “jumped to its highest level in three years as the improving political sentiment in Germany and the upbeat comments from the ECB yesterday are fuelling the rally,” said market analyst David Madden at CMC Markets UK.

“Merkel is one of the biggest proponents of the eurozone project, and her ability to remain in power will be key to ensuring stability as we go forward,” said IG analyst Joshua Mahony.

European bourses also finished higher, with Frankfurt rising 0.3% and Paris 0.5%.

In the US, meanwhile, investors continued to aggressively add to stock holdings. All three major US indices finished at records, with the broad-based S&P 500 winning 0.7%.

Many analysts believe the market has not yet priced in the higher profits that the corporate tax cut is expected to generate.

“Over time they will have to revise their estimates for earnings higher,” said Hugh Johnson of Hugh Johnson Advisors.

Most large technology shares also rose, with , Amazon, Google-parent Alphabet and Microsoft all winning one % or more.

But Facebook sank 4.5% after announcing a plan to update its newsfeed to emphasize posts from friends and family over other content.

The shift prompted fears it could drive away advertisers if people spend less time on the social network.

Key figures around 2140 GMT

New York – DOW: UP 0.9 % at 25,803.19 (close)

New York – S&P 500: UP 0.7 % at 2,786.24 (close)

New York – Nasdaq: UP 0.7 % at 7,261.06 (close)

London – FTSE 100: UP 0.2 % at 7,778.64 points (close)

Frankfurt – DAX 30: UP 0.3 % at 13,245.03 (close)

Paris – CAC 40: UP 0.5 % at 5,517.06 (close)

EURO STOXX 50: UP 0.4 % at 3,607.98

Tokyo – Nikkei 225: DOWN 0.2 % at 23,653.82 (close)

Hong Kong – Hang Seng: UP 0.9 % at 31,412.54 (close)

Shanghai – Composite: UP 0.1 % at 3428.94 (close)

Euro/dollar: UP at US$1.2200 from US$1.2030 at 2200 GMT Thursday

Pound/dollar: UP at US$1.3737 from US$1.3537

Dollar/yen: DOWN at 110.98 yen from 111.29 yen

Oil – North Sea: UP 61 cents at US$69.87 per barrel

Oil – West Texas Intermediate: UP 50 cents at US$64.30 per barrel — AFP

Source: The Sun Daily

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