Honeymoon’s over | Calamatta Cuschieri

There was a global stocks sell-off on Wednesday with the “Trump Trade” that has been driving a global stock rally in recent weeks seeming to fade as investor sentiment turned more pessimistic about the chances of the new US President driving through his planned reforms.

European markets were in the red, with all sectors and major bourses lower. Banks and financial services were among the worst performers after US stocks witnessed their worst day of the year as banks faced pressure from falling yields.

For the first time since the election, markets are doubting whether President Donald Trump will stand by his two main campaign pledges: to deliver tax cuts and infrastructure reinvestment. As doubt lingered among investors, US stocks were in negative territory on Wednesday for a fifth consecutive session.

Bank shares sink

Expectations that the Trump administration will loosen US regulation on banks, and that the Fed will continue to raise interest rates have helped drive gains for the banking sector globally. On Wednesday however, US banks recorded their steepest slide since the June Brexit vote, as the Treasury yield curve flattened and investors remained concerned that Trump’s policy initiatives might take longer to implement than previously thought.

European banks felt the full force of this speculation and traded in the red as a result. Shares in UK banks Barclays, HSBC and Lloyds all lost ground. Deutsche Bank, Credit Agricole and Banco Santander suffered the same fate. It was a similar story on Wall Street, with top guns Wells Fargo and JP Morgan trading lower. It wasn’t all red though, as Bank of America and Citigroup went against the flow to trade 0.37% and 0.47% higher, respectively.

It was further bad news for Dutch lender ING, as the bank confirmed it is facing a criminal investigation into alleged money laundering and corruption by the Dutch authorities, which could lead to significant fines. Shares fell 3% on the news.

Nike lower, FANG up

Shares in Nike were the anchors dragging on the Dow, after fiscal third-quarter earnings came to light. Although profits outpaced Wall Street’s expectations, revenue fell short of expectation and the sportswear maker slid 6% after giving a downward outlook for sales growth.

But amid the general sell-off mood on Wednesday, shares in Facebook, Apple, Netflix and Google provided some optimism to an otherwise dull trading day. Apple shares went against the trend to trade 1.04% higher, and Netflix also opened in the green. Shares in Facebook rebounded from an early morning sell-off to close the day 0.52% higher at $139.24, while Google parent Alphabet was trading 0.41% higher.

This article was issued by Rebecca Naudi, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.