Asia-Pacific stock markets plunged in early trade as turmoil surrounding US president Donald Trump set off a flight to haven assets. Bonds, yen and gold gained.
Here’s the scorecard
ASX 200: 5,756 -29 -0.5%
AUD/USD: 0.7433 +0.0003 +0.04%
Nikkei 225 Stock Average:19,548 -267 -1.4%
USD/JPY: 111.15 +0.32 +0.29%
Gold:1,259.63 +0.93 +0.07%
Stocks markets in Sydney, Seoul and Tokyo fell 0.5% to 1.4% after the S&P 500 Index plunged by the most since September. The US dollar erased all its gains since president Donald Trump’s election win while the yen added to Wednesday’s gains.
Gold had its biggest one-day rally since the UK shock vote to leave the European Union last year on Wednesday and Treasury yields dropped 10 basis points in the previous session to 2.23% to the lowest level since April 19 as traders reduced wagers on US rate increase next month.
“Markets are set to enter risk-off mode in the near-term with the level of political uncertainty in the US continuing to rise,” Credit Suisse analysts Hasan Tevfik and Peter Liu wrote in a note to clients.
Talk of a potential impeachment of Trump — after his reported strong-arming and then firing of the FBI director, James Comey — has gotten investors’ attention.
It’s not that investors are necessarily taking an impeachment as likely. It’s that the challenge to Trump’s political power has reached a level which could threaten his economic agenda.
“What we do know is this bout of risk aversion is certainly about a giant push back on the future of tax reform and Trump’s ability to deliver (anything) has been dealt a massive blow given the level and magnitude of controversies in play,” IG Ltd’s chief market strategist Chris Weston said.
All that uncertainty has spurred sentiment shift, after Wall Street surged to record highs earlier this week, and revived volatility.
Australian 10-year bond yields fell to 2.49%, near its lowest level in a month.
The yen was up 0.3% to 111.15 per US dollar. The currency surged 2.1%, the most since November, on Wednesday.
The 10-year US bond yields dropped 10 basis points on Wednesday to 2.23 percent, the lowest since April 19.
Gold was steady after climbing for five straight days to the highest level since the end of April.