Global stock markets, dollar decline as ‘Trump Trade’ deflates over doubts
NEW YORK (Reuters) – Stocks, the dollar and US long-dated Treasury yields slipped on Monday as investors fretted that US President Donald Trump’s defeat over health-care reform foreshadowed difficulties delivering other campaign promises, in particular fiscal stimulus.
Trump’s failure to rally enough support from his own Republican party, which controls both houses of US Congress, to repeal and replace Obamacare spurred a rush to safe-haven assets such as gold, the Japanese yen and the Swiss franc.
MSCI’s all-country world equity index was down 0.16% as the fall in risk appetite dominated Asian and European stock markets.
The index was dragged down further after a lower open on Wall Street when main US stock indexes hit their lowest levels in six weeks.
“The markets around the globe are falling as a rethinking of the ‘Trump Trade’ begins to focus on reality,” Peter Cardillo, the chief market economist at First Standard Financial in New York, wrote in a note. “While we don’t expect a full-blown correction to commence at this time, we do see rising negative sentiment replacing the ‘Hope Trade.’”
In early afternoon trading, the Dow Jones Industrial Average fell 66.4 points, or 0.32%, to 20,530.32, the S&P 500 lost 5.56 points, or 0.24%, to 2,338.42, and the Nasdaq Composite dropped 6.13 points, or 0.11%, to 5,822.61.
European shares were hit by losses among miners and banks. Europe’s broad FTSEurofirst 300 index dropped 0.5% to 1,477.12.
The US dollar fell to its lowest since November against a basket of currencies as investors lost confidence in prospects for a US fiscal-spending boost under the Trump administration.
The dollar index had risen to a 14-year high near 104.00 in early January when expectations for inflation-boosting stimulus under the Trump presidency were at their peak. On Monday, the index slipped below 99.0, its lowest since November 11, two days after the results of the presidential vote.