Global Stocks Fall After U.S. Rout as Bonds Gain

• Global Stocks Fall After U.S. Rout as Bonds Gain

European and Asian equity markets slumped in the wake of the worst day in eight months for U.S. stocks as investors rushed to the safety of bonds.

Shares across Europe extended declines after the S&P 500 Index plummeted by the most since September, following reports that U.S. President Donald Trump asked FBI director James Comey in February to halt an investigation and the justice department appointed a special counsel to probe Russia’s role in the 2016 election. Treasury yields dropped to the lowest in a month. The dollar benefited from weakness in emerging-market currencies as a political crisis in Brazil added to the chaos in Washington.

As the turmoil surrounding Trump threatens to derail the policy agenda that helped push global equities to records as recently as Tuesday, a gauge of U.S. stock volatility surged the most since the U.K. voted to leave the European Union last June. Many of the trades sparked by the president’s November election have now reversed, with the dollar all but erasing its post-election rally.

“The market will revert to much higher volatility and this could be the start of it,” said Richard Haworth, chief investment officer of 36 South Capital Advisors, a London-based hedge fund which bets on rising price swings. “The sharp move this week reflects how short volatility the market was — how complacent.”

The dollar saw some respite, however, after former FBI Director Robert Mueller was appointed as special counsel to investigate Russian efforts to influence the 2016 election.