- Global Stocks Drop and Gold Gains on Trump Concern
Global stocks slumped and gold advanced as Donald Trump’s firing of the U.S. acting attorney general added to concern over the unpredictability of decisions in the new administration.
The MSCI All-Country World Index headed for a fourth straight loss and gold rose for a third day as turmoil from Trump’s Friday immigration order continued to unsettle markets. S&P 500 Index futures declined, after the biggest intraday loss for the benchmark gauge since the November election. Shares in Tokyo maintained losses after the Bank of Japan left monetary policy unchanged. Oil headed toward its first monthly decline since October.
The firing of Sally Yates added to jitters among investors sparked by Trump’s imposition of a ban on U.S. entry for passport holders from a number of Muslim-majority nations. Along with protectionist moves on the trade front, the news raises the risk of foreign investors diminishing their appetite for American assets. Trump dismissed Yates after she said his order wasn’t consistent with the Justice Department’s “solemn obligation to always seek justice and stand for what is right.”
“Trump’s isolationist policies mean increasing risks associated with U.S. assets,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Wellington. The firing “certainly adds to the case for higher U.S. risks,” he said.
The equity market moves represent the biggest investor rebuke yet to the new administration’s preferences, after U.S. stocks had staged one of the best-ever post-election rallies on speculation Trump’s policies would stoke the economy. Meantime, the BOJ’s decision to keep its key policy tools unchanged came as little surprise, with all 42 economists surveyed by Bloomberg this month having predicted no change.
What’s coming up in the markets:
- The Federal Reserve announces its policy decision on Wednesday. Like the BOJ, it is expected to leave lending rates where they are, though the Fed’s statement will be parsed for any reading on Trump’s impact on the world’s largest economy.
- Trump plans to announce his nomination to the Supreme Court Tuesday, a move likely to dominate headlines and perhaps delay the presentation of further details on spending policies.
- Apple Inc., Facebook Inc. and Amazon.com Inc. are among the major U.S. companies due to report results this week. Of the S&P 500 names to report so far, 73 percent have topped profit estimates.
Here are the main moves in markets on Tuesday:
- Futures on the S&P 500 dropped 0.3 percent as of 8:11 a.m. in London. The benchmark gauge fell 0.6 percent on Monday, declining as much as 1.2 percent for the biggest intraday drop since Nov. 1, before staging a late-day comeback. It’s still up 1.9 percent for January and is higher by 6.6 percent since Trump’s election.
- The Stoxx Europe 600 index was little changed, with banks and insurers posting the biggest declines while retailers gained.
- Japan’s Topix fell 1.4 percent, with almost all its losses coming before the BOJ decision. NEC Corp. tumbled 17 percent, the most ever, after cutting its full-year profit forecast. Sony Corp. lost 2.3 percent after taking a $1 billion writedown in its movie business.
- The MSCI All-Country World Index is headed toward a fourth straight drop, its longest losing streak since November. The MSCI Asia Pacific Index fell 0.8 percent, poised for the biggest retreat since Dec. 15, after reaching the highest level since September on Monday.
- China, Hong Kong and Vietnam markets remained closed for the Lunar New Year holiday.
- The Bloomberg Dollar Spot Index fell 0.1 percent. The gauge is trading near the lowest level in two months, and is down 2 percent for the year.
- The euro climbed 0.2 percent to $1.0713.
- The yen rose 0.1 percent to 113.65 per dollar, paring an earlier advance of 0.5 percent. The currency jumped 1.2 percent in the previous session. The BOJ left its inflation forecasts largely untouched as it waits to see the impacts of a recent decline in the yen and the policies of Trump’s administration.
- West Texas Intermediate crude slipped 0.5 percent to $52.38 a barrel, after losing more than 1 percent during each of the previous two sessions. Crude is heading for a monthly drop of 2.7 percent as signs that U.S. supply is expanding offset OPEC’s production curbs.
- Gold added 0.4 percent to $1,200.59 an ounce, after rising 0.4 percent the previous session.
- The yield on 10-year Treasuries dropped one basis point to 2.48 percent.