Political Uncertainty Roils Global Markets

Asian equity markets were broadly lower, extending a selloff in the U.S. overnight, as doubts increased that the Trump administration would be able to deliver on its policy goals due to mounting political problems.

The latest political developments have put President Donald Trump’s administration on the defensive and investors world-wide are more worried about his ability to push through proposals on tax cuts, deregulation and infrastructure spending.

Concerns among global investors got worse on Tuesday when reports emerged that Mr. Trump asked James Comey, who he subsequently fired as the head of the Federal Bureau of Administration, to back off the investigation of former national security adviser Michael Flynn. The White House has denied the account.

The news that former FBI Director Robert Mueller will serve as special counsel to oversee a federal investigation into alleged Russian interference in the 2016 presidential election did little to calm market jitters.

Japan’s Nikkei Stock Average was recently down 1.4%. A global flight to haven assets boosted the value of the yen, weighing on the country’s exporters.

The U.S. dollar dropped 2% overnight against the yen, registering its largest one-day percentage decline since July 2016. In Asian trade, the dollar recovered slightly Thursday to trade up 0.2% at ¥111.01. Among key exporter stocks, Mitsubishi Motors was down 2.4%, while Mazda Motor fell 2.3% and Honda Motor declined 1.8%.

“The aggressive risk-off reverberations are taking the market by surprise right now,” said Stephen Innes, head of trading for Asia at forex broker Oanda.

The Wall Street Journal

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

Latest posts by Stephen Innes (see all)