Big Dollar Sell-off Gathers Steam, S&P 500 Hits Record

The US dollar slid to a four-year low after President Trump dismissed concerns about its weakness, pushing the euro above $1.200 and lifting sterling to around $1.380 late on Tuesday. Gold surged past $5,200 an ounce to a fresh record as the dollar fell. The S&P 500 closed at a record high, despite sharp losses in US health insurers, while the FTSE 100 rose as HSBC shares jumped.

Equities

The FTSE 100 closed 0.6% higher on Tuesday, ending the session at its strongest level in more than a week as heavyweight bank stocks pushed the index higher. Gains came late in the session as investors positioned ahead of a busy run of corporate results and central bank decisions. The more domestically focused FTSE 250 added 0.2% by the close.

HSBC shares closed 2.9% higher on Tuesday, briefly lifting the bank’s market value above $300bn for the first time. The move helped push the UK bank index up 2.4%, taking it to its highest level since May 2008. The rally came ahead of upcoming earnings and followed continued investor focus on the strength of balance sheets and capital positions across the sector.

By contrast, Dr Martens shares closed 11.6% lower on Tuesday, touching their weakest level since June 2025. The bootmaker’s stock fell after management forecast broadly flat revenue for 2026, following a decline in third-quarter sales that highlighted pressure on discretionary spending. Elsewhere in London, precious metal miners fell sharply, with the sector down 5.2% by the close after reaching record highs a day earlier.

In the US, the S&P 500 closed 0.41% higher on Tuesday at a record level of 6,978.60, marking its fifth consecutive day of gains. The Nasdaq Composite closed up 0.91%, while the Dow Jones Industrial Average fell 0.83% by the close, weighed down by sharp losses in healthcare stocks.

UnitedHealth shares closed 19.6% lower on Tuesday after the US administration proposed changes to Medicare insurer payment rates, adding to concerns raised by the company’s 2026 revenue outlook. Humana ended the session down 21%, while CVS Health closed 14.2% lower.

General Motors shares closed 8.7% higher on Tuesday after the carmaker reported stronger-than-expected fourth-quarter core profit. Technology stocks also lifted US markets, with Microsoft, Amazon, Nvidia, Apple and Broadcom all closing higher ahead of earnings later this week. Corning shares surged 15.6% by the close after announcing a deal worth up to $6bn with Meta to supply fibre-optic cables for artificial intelligence data centres.

Boeing shares ended Tuesday’s session 1.6% lower after swinging between gains and losses earlier in the day. The company returned to a quarterly profit following a unit sale but reported larger-than-expected losses in its two biggest divisions. In airlines, American Airlines closed down 7% on Tuesday as winter storms weighed on its near-term outlook, while JetBlue ended the day 6.9% lower after posting a wider-than-expected quarterly loss.

Forex & Commodities

The US dollar traded near a four-year low after further selling late on Tuesday, following comments from President Donald Trump that traders read as dismissive of the currency’s weakness.

The euro fell back slightly early this morning to $1.199, after pushing above the $1.200 level late on Tuesday for the first time since 2021. Sterling eased modestly in early trading on Wednesday to $1.380, having climbed sharply late on Tuesday to its highest level since 2021. The pound’s recent rise has coincided with sustained dollar selling and comes ahead of the Federal Reserve’s policy announcement later today.

The Japanese yen strengthened late on Tuesday to 152.10 per dollar, its strongest level in around three months, before weakening slightly to 152.8 in early Wednesday trading. The move followed renewed talk of potential coordination between US and Japanese authorities after Japanese officials repeated warnings about excessive currency moves.

Elsewhere, the Australian dollar rose late on Tuesday to $0.7023, its highest level since February 2023, before slipping back to $0.6987 early this morning after data showed Australian inflation accelerated in the December quarter.

Gold prices climbed further early on Wednesday, with spot gold trading around $5,280 per ounce after reaching a fresh record high of $5,285 earlier in the session. The metal has risen sharply since the start of the year as the dollar has weakened and ahead of the conclusion of the Federal Reserve’s January meeting later today.

Oil prices extended gains in Asian trading on Wednesday after rising strongly late on Tuesday. Brent crude was quoted around $67.68 a barrel early this morning, while US crude traded near $62.58. Prices have been supported by supply disruptions following a winter storm in the US, which curtailed crude output and temporarily halted exports from Gulf Coast ports.