Stocks, dollar fall victim to Trump tax cut doubts
london — Growing doubts US President Donald Trump will be able to deliver on a promise of tax cuts that has powered stocks markets to record highs pushed shares lower on Wednesday and drove investors to seek safety in government debt, gold and the yen.
The greenback touched a fourmonth low against the Japanese currency, whose strength helped push Tokyo stocks to a three-week low, while the euro held close to its highest since early February at around $1.08.
Investors’ flight to safety pushed down US Treasury yields and the gap between US and German 10year government borrowing costs hit its narrowest since November.
European shares opened lower after Asian shares suffered their biggest percentage daily fall since mid-December and, on Tuesday, the S&P 500 fell by more than one per cent for the first time since October 11.
Waning risk appetite also hit commodities: Brent crude oil fell 20¢ to $50.76 a barrel, while copper fell 0.5 per cent to $5.747 a tonne.
The main factor behind the selloff in risky assets was doubt that Trump would be able to deliver on his agenda for economic growth, including tax cuts and relaxed regulation, any time soon.
The pan-European Stoxx 600 index fell 0.9 per cent to a twoweek low, led lower by banks and miners. Britain’s FTSE 100 index fell 0.9 per cent
MSCI’s broadest index of AsiaPacific shares outside Japan fell 1.4 per cent at one point, its biggest intraday percentage fall since December 15. In the previous session, the index hit its highest level since June 2015. Japanese stocks fell two per cent, Australian shares tumbled 1.6 per cent and mainland Chinese shares closed down 0.5 per cent. MSCI’s main measure of emerging market equities slid nearly one per cent.
E-mini futures on the S&P500 and Dow Jones Industrial Average indicated Wall Street would open lower and the CBOE VIX index, known as the “fear gauge”, of implied volatility on the S&P topped 13 per cent for the first time since mid-January.
The dollar was flat against a basket of currencies but down 0.3 per cent versus the yen, having hit a four-month low of ¥111.25 earlier in the day. The euro dipped 0.2 per cent to $1.0790, off a high of $1.0818 as European trading began. Sterling fell 0.1 per cent to $1.2463. —