Trump concerns send shivers across markets | Calamatta Cuschieri

Global markets moved lower during Wednesday’s trading session as investors reacted to fresh corporate earnings and ongoing political uncertainty in the US, and in particular caused by President Donald Trump. Investors appear increasingly concerned after the latest in a string of crises for the embattled US administration.

This has raised further doubts on Trumps’ ability to implement an aggressive stimulus programme that includes tax cuts and big government spending. This news has sent the dollar trading at a six-month low and sparked interest for the likes of the yen, treasuries and gold.

In Europe, stocks were in negative territory with all but the utility sector trading in the red. The major bourses in the UK, France and Germany all lost ground on Wednesday with the CAC 40 taking the biggest hit, and falling 1.31%.

Autos struggle

Auto stocks were among the worst performing sectors. Fiat Chrysler’s stock took a substantial hit following a Reuters report that the European Union would begin legal action against Italy for not policing allegations of emission test cheating by the car maker. Its shares were down 4.69% by the end of the session.

Staying in the sector, it was a sea of red for rivals including BMW and Volkswagen, whose shares lost 0.46% and 1.60%, respectively.

Financials also in the red

Lloyds Banking Group went against the norm and posted a rise of 1.37% during the session

Lloyds Banking Group went against the norm and posted a rise of 1.37% during the session.

Shares in financial companies dropped on Wednesday, leading the overall market’s decline as political uncertainty intensified, weighing on investor sentiment.

Banks in Europe struggled. Shares in HSBC were down 1.6% and Barclays lost 1.28%. German heavyweight Deutsche Bank was down 3.5%. But there was some good news for Lloyds Banking Group, who went against the norm and posted a rise of 1.37% during the session.

It was a similar picture on Wall Street. Among the most actively traded stocks in the sector, Goldman Sachs Group tumbled 4.07% and Bank of America shed 4.67%. Citigroup also struggled, losing 3.33% and JP Morgan Chase was off 2.82%.

The sector has been one of the biggest beneficiaries to the so-called “Trump rally”, climbing on the hopes that the incoming US President would deregulate the industry and push through other initiatives that were seen as supportive to the sector’s profits. Getting such legislation passed may be less likely in the current environment, since Trump faces controversy for his recent firing of the then-director of the Federal Bureau of Investigation, who had been investigating Trump’s former national security advisor.

Safe haven assets in demand

In a day ruled by pessimism, investors flocked to perceived safe haven assets. Gold prices were up 1.90%, trading around $1,260 an ounce. Demand for US government bonds pushed the yield on the 10-year Treasury note to a three-week low.

Disclaimer:

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.