US political risk weighs on market sentiment

A fresh rally in oil prices boosted energy firms in Asia on Wednesday although most equity markets struggled after two days of gains, while confidence was given a knock by fresh revelations regarding Donald Trump’s Russia links.

Crude, which has seen wild swings in recent months, has bounced back from last week’s losses with gains of more than one percent Tuesday on bets that US stockpiles had fallen last week.

Comments from the OPEC cartel that its output cuts with Russia were bearing fruit were also welcomed and on Wednesday Asian traders extended the oil rally, boosting energy companies in Hong Kong, Tokyo and Sydney.

However, the ongoing crisis surrounding Trump stepped up on Tuesday when his son Donald Jr released emails showing he had embraced Russia’s efforts to support the tycoon’s presidential campaign against Hillary Clinton.

The news is the latest blow to the White House, which has been battered by accusations over Russian collusion and accusations of cover-ups — fuelling worries about the president’s ability to push through his market-friendly economic agenda.

“Today’s revelation … has sent US political risk to another level,” said Stephen Innes, a senior trader at OANDA.

“Investors are once again questioning President’s Trump’s administration ability to pass through a pro-business agenda/attitude/stance to further stimulate the US economy.”

Tokyo ended the morning session 0.3 percent lower as investors grow averse to risky assets and opt for safer bets such as the yen, which hurts Japanese exporters.


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

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes