Stocks drop, dollar rises broadly

The dollar rose broadly, leaving the euro, pound and yen in negative territory

Stocks slid on Wednesday, echoing losses on Wall Street overnight, while the dollar rose broadly, after Federal Reserve Chair Jerome Powell fell short of confirming investors’ expectations that U.S. interest rates will decline sharply in coming months.

In Europe, defence stocks – one of the star-performing sectors this year – jumped after U.S. President Donald Trump said he believed Ukraine could retake all its land occupied by Russia, marking a sudden shift in rhetoric in Kyiv’s favour.

After seeing the Economic trouble (the war) is causing Russia, I think Ukraine, with the support of the European Union, is in a position to fight and WIN all of Ukraine back in its original form, he said in a social media post on Tuesday, although there was no sign of any actual change in U.S. policy.

Defence stocks such as Rheinmetall, Hensoldt and SAAB rose between 2-4.8%, although losses in financials kept the STOXX 600 down around 0.4% on the day.

In a sometimes-meandering speech to the U.N. General Assembly, in which he rejected moves by allies to recognise a Palestinian state, Trump condemned Western nations for their approach to climate change and immigration.

While geopolitics have been a large driver for global markets this year, the focus for investors on Wednesday was firmly trained on the outlook for the U.S. economy and the likely path of U.S. interest rates.

The dollar rose broadly, leaving the euro, pound and yen in negative territory, pushing up the U.S. currency against a range of six others by 0.35% on the day.