Markets down on trade concern

On Wednesday the prospect of escalating protectionism depressed European and Asian stock markets as President Donald Trump’s plans to punish foreign imports appeared to gather force. U.S. equity futures slumped, while most government bonds climbed.

The Stoxx Europe 600 Index headed for the first drop in three days, led by mining and auto shares. Gauges in Asia slid earlier as investors mulled the implications of the resignation from Trump’s administration of economic adviser Gary Cohn, a free-trade proponent. News that the White House is considering clamping down on Chinese investments and imposing broader tariffs added to the gloom.

Cohn’s resignation “shows that within the Trump administration the pendulum is swinging toward anti-trade,” said James Cheo, an investment strategist at Bank of Singapore. “What we should be watching out for is how other countries react in response to the tariffs.”

The prospect of U.S. trading partners retaliating with their own duties overshadowed a perceived detente with North Korea that helped underpin gains on Tuesday. Trump signaled that he’s open to talks with the country after Kim Jong Un’s regime told South Korean envoys he’s willing to consider denuclearization under certain conditions. South Korea’s won rallied.

The Stoxx Europe 600 Index decreased 0.5 percent as of 6:08 a.m. New York time. Futures on the S&P 500 Index sank 1 percent. The MSCI Asia Pacific Index declined 0.5 percent. The U.K.’s FTSE 100 Index fell 0.1 percent. The MSCI Emerging Market Index dipped 0.5 percent.

The euro rose 0.2 percent to $1.2432 with its fifth straight advance. The British pound decreased 0.2 percent to $1.3866, the first retreat in a week. The MSCI Emerging Markets Currency Index increased 0.2 percent to the highest in more than a week.

West Texas Intermediate crude decreased 0.7 percent to $62.15 a barrel. Gold fell 0.1 percent to $1,333.11 an ounce.

This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.