Stocks reel from Barcelona attacks and fear Trump’s agenda in limbo after firing his chief strategist
Global stock markets sank on Friday as traders sought haven investments such as gold following a terror attack in Barcelona and the glum mood was compounded by a week of drama in Washington which intensified doubts about President Donald Trump’s ability to deliver on pro-growth policy promises such as tax reform.
After a late morning boost on Trump’s firing of controversial White House strategist Steve Bannon, the dollar and US equities lost their lustre as investors were left wary after a week in which Trump alienated potential allies.
Investors also questioned how much Trump’s removal of Bannon, a conservative media entrepreneur and activist who was a darling of Trump’s base, would pave the way for policies such as tax reform.
“It’s only marginally positive as it doesn’t put money in anybody’s pocket in the way tax reform would,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. “There’s still question marks on what this means and what other shoes are to drop.”
The Dow Jones Industrial Average fell 76.22 points, or 0.35 per cent, to 21,674.51, the S&P 500 lost 4.46 points, or 0.18 per cent, to 2,425.55 and the Nasdaq Composite dropped 5.39 points, or 0.09 per cent, to 6,216.53.
With a decline of more than 2 per cent for the last two weeks, the S&P marked its weakest two-week period since before Trump was elected on November 8.
The US dollar index had pared losses after the Bannon news but then fell well off its session highs in the afternoon.
The dollar index fell 0.25 per cent, with the euro up 0.36 per cent to $1.1765.
“It seems at the moment that politics, terrorism and North Korea are driving the volatility one way or the other,” said Bill Stone, global chief investment strategist at PNC Wealth Management in Philadelphia.
The pan-European FTSEurofirst 300 index lost 0.73 per cent, hurt by the news from Barcelona and MSCI’s gauge of stocks across the globe shed 0.31 per cent.
Investor worries deepened about Trump after he upset Republican colleagues, corporate leaders and overseas allies over his response to protests in Charlottesville, Virginia.
Trump drew fire after he seemed to equate protests by white nationalists with those of anti-fascist groups on Tuesday and then on Thursday decried the removal of statues that memorialise Civil War-era defenders of slavery.
Investors were also on edge for fear of market moving events over the weekend after a terrorist attack in Barcelona killed 13 people on Thursday.
US Treasury yields were little changed as the exit of Bannon, known for his economic nationalist views, reduced the appetite for bonds.
Benchmark 10-year notes yielded 2.1974 per cent, from 2.197 per cent late on Thursday.
Spot gold dropped 0.2 per cent to US$1,285.51 an ounce.
Oil prices rose sharply on Friday, as the dollar fell and US drillers cut rigs, feeding a rally that boosted global benchmark Brent crude to a weekly gain while US crude was virtually flat on the week.
US crude rose 3.38 per cent to US$48.68 per barrel and Brent was last at US$52.84, up 3.55 per cent on the day.