European equity markets have fallen sharply on Wednesday after heavy falls on Tuesday in the US and drops in Asian markets overnight. In afternoon trading in Dublin, the ISEQ index of Irish shares was down over 1.2 per cent, while other European markets were also weaker.
The drops reflect growing doubts about Donald Trump’s economic growth agenda prompted investors to dump risky assets and rush to safe havens such as gold and government debt.
In London the FTSE 100 was trading over 0.7 per cent lower in afternoon trading, while the Frankfurt Dax was down almost 0.5 per cent. In Dublin the ISEQ index of Irish shares was down by more than 1.2 per cent, with bank shares lower and Ryanair down by more than 2 per cent, amid reports about the increased fears of the impact of Brexit on the airline sector.
US shares tumbled on Tuesday on concerns that higher interest rates and pro-growth US policies were on hold, boosting safe-haven Treasuries and gold and sending the dollar to a nearly four-month low against the yen.
The US S&P 500 financial sector was down as much as 3.1 percent and posted its biggest daily plunge – of 1.24 per cent – in about nine months.
Analysts attributed the selling to reduced confidence that US President Donald Trump’s pro-growth policies, including financial deregulation, would occur soon, and to concerns of a dovish Federal Reserve. Investors are watching the Trump administration’s struggles to push through the healthcare legislation overhaul as a sign he may also face setbacks delivering promised corporate tax cuts.
Tech stocks
The tech-heavy US Nasdaq Composite fell as much as 1.9 per cent after hitting a record intraday high earlier on the back of a rise in Apple shares, which briefly touched a record $142.80 a share before falling 1.15 per cent to close at $139.84.
“The market is starting to get a little fed up with the lack of progress in healthcare because everything else is being put on the back burner,” said RJ Grant, head of trading at Keefe, Bruyette & Woods in New York.
The Dow Jones Industrial Average ended down 237.85 points, or 1.14 per cent, at 20,668.01. The S&P 500 closed down 29.45 points, or 1.24 per cent, at 2,344.02. The Nasdaq Composite ended down 107.70 points, or 1.83 per cent, at 5,793.83.
Overnight Equities tumbled across Asia, following the US lead.The Japanese yen rose as investors sought haven assets.
The MSCI Asia Pacific Index dropped the most since December, with financial and commodity shares leading the sell-off. Benchmark indexes in Japan, Hong Kong and Australia fell at least 1.4 per cent after the S&P 500 Index sank more than 1 per cent for the first time since October 11th. A gauge of emerging-market stocks halted an eight-day rally. A slump in government bond yields continued and the yen strengthened for a seventh day. Gold maintained gains while base metals tumbled.
Volatility in financial markets is soaring after a period of relative calm as concern is mounting that pro-growth US policies won’t sail through Congress. The Republican plan to repeal and replace Obamacare is drawing strong opposition ahead of a crucial floor vote in the House. House Republicans warned failure to pass a health-care bill on Thursday could imperil tax and spending reforms.
Bloomberg/Reuters/
