Trump travel curbs weaken global stocks as dollar drops against yen
NEW YORK (Reuters) – Equity markets fell across the world on Monday and the dollar slipped against the safe-haven yen after immigration curbs introduced by US President Donald Trump stirred concerns about the impact of his policies on global trade and the economy.
Stocks fell about 1% on Wall Street and Europe after Trump’s executive orders on Friday to bar Syrian refugees and suspend travel to the United States from seven countries put the spotlight back on his protectionist bent.
The dollar fell against the yen as investors sought the traditional security of the Japanese currency, and gold edged higher amid the heightened political uncertainty. Spot gold rose 0.73% to $1,197.10 an ounce, while the dollar slipped 1.03% to 113.87 yen.
The negative reaction to Trump’s orders put Wall Street’s main indexes on course for their worst day in more than three months.
The CBOE Volatility index rose 16.4% from multiyear lows, though the index, known as Wall Street’s “fear gauge,” only rose to a oneweek high.
Investor enthusiasm over expectations of a pro-business Trump agenda, especially tax and regulatory reform, had spurred a rally on equity markets, said Rick Meckler, president of the LibertyView Capital Management LLC hedge fund in Jersey City, New Jersey.
“Those two things were most important,” he said. “We seem totally caught up now in immigration reform and travel restrictions. Those are not things the business community is necessarily excited about.”
MSCI’s all-country world stock index fell 1.14%, while the FTSEurofirst 300 Index of leading pan-European stocks fell 0.99%. In Japan, the Nikkei fell 0.5%, and Australian shares slid 0.9%.
On Wall Street, the Dow Jones Industrial Average fell 208.23 points, or 1.04%, to 19,885.55 in early afternoon trading. The S&P 500 lost 25.28 points, or 1.10%, to 2,269.41, and the Nasdaq Composite dropped 78.07 points, or 1.38%, to 5,582.71.
The euro slipped to a 11-day low against the dollar after German inflation data came in slightly weaker than expected and took some pressure off the European Central Bank to wind down its stimulus program.
The euro fell 0.05% to $1.0689.
US Treasuries were little changed ahead of policy meetings of the US Federal Reserve on Tuesday and Wednesday and a heavy week of data that culminates with Friday’s jobs report for January.
The Benchmark 10-year US Treasury note gained 2/32 in price to yield 2.4715%.
Germany’s 10-year yields dipped to 0.44% after inflation hit a three-and-a-halfyear high but, at 1.9% on the year, slightly undershot forecasts.
Oil prices fell as news of another weekly increase in US drilling activity spread concern about rising output just as many of the world’s oil producers are trying to comply with a deal to pump less to try to prop up prices.
The number of active US oil rigs rose to the highest since November 2015 last week, according to Baker Hughes data, showing drillers are taking advantage of oil prices above $50 a barrel.
Global benchmark Brent crude-oil prices were down 37 cents at $55.15 a barrel, while US crude futures traded down 59 cents at $52.58.