Asian stocks slip on Trump order
SINGAPORE: Asian share markets and Wall Street stock futures fell yesterday after immigration curbs introduced by US President Donald Trump heightened concerns about the impact of the new administration’s policies on trade and the economy.
European markets were also set for a sluggish start, with CMC Markets expecting Germany’s DAX to start the day 0.3% lower, Britain’s FTSE 100 to open down 0.4%, and France’s CAC 40% to fall 0.5%.
On Friday, the US president put a 120-day hold on allowing refugees into the country, an indefinite ban on refugees from Syria and a 90-day bar on citizens from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen.
The executive order led to huge protests in many US cities and a raft of legal challenges amid confusion over its implementation. It has also raised worries about the potentially destabilising impact of Trump’s policies.
“Trump always stated these were policies he would implement,” said James Woods, a global investment analyst at Rivkin Securities in Sydney.
“Quite a lot of it was brushed off as ‘campaign rhetoric’, but he is following through. This renews concerns about a trade war with China that would significantly affect the Asian and the global economy. The biggest threat to markets at the moment is if Trump continues down the path of protectionism without focusing on economic policies.”
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.4% in holiday-thinned trade. Australian shares closed down 0.9%, while New Zealand ended the day 0.7% lower.
Japan’s Nikkei was down 0.5% for the day as demand for the safe-haven yen weighed on exporters.
Pointing to a weaker opening on Wall Street, S&P Nasdaq and Dow Jones futures all pulled back about 0.2%.
US 10-year Treasury yields were last at 2.4752% after falling to as low as 2.462% earlier and down from Friday’s close of 2.481%.
The dollar index, which tracks the greenback against a basket of trade-weighted peers, dipped about 0.2% to 100.34 in Asian trade, after touching a session low of 100.17.
The dollar also weakened 0.4% to 114.6 yen yesterday, pulling away from a one-week high hit on Friday.
“If price action is any guide, it would appear that (Trump’s) new executive order regarding immigration signed over the weekend appears to have gone down less well with financial markets, as early weakness in the US dollar and Asia stocks suggest that markets fear some significant economic blowback,” Michael Hewson, the chief market analyst at CMC Markets in London, wrote in a note.
Adding to pressure on markets, data on Friday showed US economic growth slowed more than expected in the fourth quarter, with gross domestic product rising at a 1.9% annual rate, below the 2.2% rise expected by economists and the 3.5% growth pace logged in the third quarter.
In commodities markets oil started the week on a negative note.
US crude retreated 0.45% to $52.93 a barrel, adding to Friday’s 1.1% slide.
Global benchmark Brent crude also dropped 0.45% to $55.27, after losing 1.3% on Friday. Gold shone amid the pull-back in risk markets, but pared gains. Spot gold added 0.1% to $1,192.66 an ounce. – Reuters