US markets have witnessed big falls, which have hauled down Asian shares as President Trump battles a controversy that will affect his ability to come through with promised tax and regulatory reforms.
Global Stock Markets Fall amid Trump Controversy
Three main indexes on Wall Street fell more than 1.7% and the dollar lost most of the gains made since President Trump was elected.
Following the losses in New York, the main stock markets in Asia opened lower with the South Korean Kospi, Australian ASX 200 and Japanese Nikkei 225 opening with lows in the range of 0.9% and 1.3%.
The S&P 5 experienced its biggest single day fall since last September and on Wednesday closed at 2,357 points, 1.8% lower.
The tech oriented Nasdaq was the biggest loser closing at 6,011 points, 2.6% lower.
US stocks experienced a sharp rally following Mr. Trump’s election amid optimism over his pro-growth policies.
However, the scandal that has emerged after the firing of FBI director James Comey has increased skepticism over the president’s ability to successfully pass major policies in Congress and this has put a dump on the markets.
Gregory McKenna, AxiTrader chief market strategist in Sydney said with Mr. Comey set to address a congressional committee next week, the uncertainty will likely go on for a couple of days.
Traders on Wall Street are equally concerned.
Joseph Benanti, a Rosenblatt Securities managing director said, “It is worrisome given that it could take some time to muddle through this.
The Oval Office has adamantly denied claims that the president shared sensitive intelligence information with Russia and also refutes misconduct over the sacking of Mr. Comey. Some commentators have mentioned impeachment.
Market analyst Jasper Lawler of London Capital Group said, “Calls for President Trump to be impeached are becoming louder and this has created a sense of fear in markets, which was overdue.”
According to analysts, this will certainly distract the administration from introducing market friendly legislation and instituting spending cuts.
However, Paul Ryan, Republican Speaker of the House of Representatives said the administration’s mandate was not stalling and blamed people who were looking to harm the president.
Financial stocks, which have been performing well over the last few months suffered a major blow on Wednesday following the share price fall with JP Morgan Chase falling 3.8% and Goldman Sachs falling more than 5%. However, real estate and utilities, which are typically preferred during uncertain times due to their slow but sure growth, made considerable gains.