- Title: European stocks hit three-week low as Trump reality sets in
- Date: 23rd January 2017
- Summary: LONDON, ENGLAND, UK (JANUARY 23, 2017) (REUTERS) VARIOUS OF IG TRADERS AT THEIR DESKS ON TRADING FLOOR (SOUNDBITE) (English) IG MARKET ANALYST, CHRIS BEAUCHAMP, SAYING: "We got more of a classic Trump campaign style on Friday, and that's rattling nerves a bit really. What the rhetoric, how it will match up with reality. What the first executive orders will be. And I think in that sense we are looking at the impact on trade deals, and we're looking at the impact really on immigration. And that's the key worry I think. The shift away from open market liberal order that's dominated for so long. It could be that markets react more out of U.S. hours, than in U.S. trading hours. So we look for some sort of recovery in U.S. markets this afternoon, once things have settled down. But certainly it will be a volatile few days." VARIOUS OF IG TRADERS AT THEIR DESKS ON TRADING FLOOR (SOUNDBITE) (English) IG MARKET ANALYST, CHRIS BEAUCHAMP, SAYING: "It is the big question, how far will he go in unraveling NAFTA, how far will he go in combatting China, declaring China a currency manipulator, as they promised on the campaign trail. How will this play out with the UK's relationship with the EU, with of course the UK being promised a trade deal. We've got the meeting between the Prime Minister and the President on Friday, a very big coup there for the UK government, but these are the key things that will unnerve markets really. We're seeing weakness almost across the board this morning. Certainly in risk assets, we've seen the U.S. dollar fall too. And there is the other big question, how will his strong America first rhetoric play with a rising U.S. dollar?" VARIOUS OF IG TRADERS AT THEIR DESKS ON TRADING FLOOR (SOUNDBITE) (English) IG MARKET ANALYST, CHRIS BEAUCHAMP, SAYING: "Clearly, the market was pricing in a lot over the next few weeks and maybe they won't get those expectations fulfilled. Maybe they won't see the big news of a fiscal stimulus. It takes time to arrive. Couple that with earnings season which we had big expectations heading in to that. We saw disappointment even with the earnings of the likes of Goldman Sachs, which beat expectations. So clearly the market's probably got a little bit ahead of itself over the past six weeks as the markets tend to do." VARIOUS OF IG TRADERS AT THEIR DESKS ON TRADING FLOOR
- Embargoed: 6th February 2017 11:20
- Keywords: markets dollar shares investors Donald Trump protectionist trade
- Location: LONDON, ENGLAND, UK
- City: LONDON, ENGLAND, UK
- Country: Various
- Topics: Economic Events
- Reuters ID: LVA00160AXDHP
- Aspect Ratio: 16:9
- Story Text:European stocks and bond yields dropped on Monday (January 23) and the dollar hit a six-week low after U.S. President Donald Trump began his term in office with a projectionist speech that pushed a nervous market into safe-haven assets.
World stocks hit multi-year highs earlier this month on expectations Trump would boost growth and inflation with extraordinary fiscal spending measures.
However, his inaugural address on Friday saw investors retreat to the safety of higher-rated government bonds as the new president signalled an isolationist stance on trade and other issues.
"We got more of a classic Trump campaign style on Friday, and that's rattling nerves a bit really. What the rhetoric, how it will match up with reality. What the first executive orders will be. And I think in that sense we are looking at the impact on trade deals, and we're looking at the impact really on immigration. And that's the key worry I think. The shift away from open market liberal order that's dominated for so long. It could be that markets react more out of U.S. hours, than in U.S. trading hours. So we look for some sort of recovery in U.S. markets this afternoon, once things have settled down. But certainly it will be a volatile few days," IG Market Analyst, Chris Beauchamp told Reuters.
Trump also made it clear that he plans to hold talks with the leaders of Canada and Mexico to begin renegotiating the North American Free Trade Agreement.
"It is the big question, how far will he go in unraveling NAFTA, how far will he go in combating China, declaring China a currency manipulator, as they promised on the campaign trail. How will this play out with the UK's relationship with the EU, with of course the UK being promised a trade deal" Beauchamp added.
European stocks fell 0.7 percent and the broader Euro STOXX 600 fell 0.6 percent in early trades on Monday, both hitting their lowest level this year so far.
Japan's Nikkei dropped 1.1 percent while shares in Australia dropped 0.8 percent after Trump's administration also declared its intention to withdraw from the Trans-Pacific Partnership (TPP), a 12-nation trade pact that Japan and Australia have both signed.
Other Asian shares were more resilient, however, in part due to the dollar's weakness, and MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent.
The U.S. Federal Reserve, which has indicated that it expects to raise its benchmark interest rate three times this year, is due to hold its next meeting on Jan. 31 and Feb. 1.
The yield on Germany's 10-year government bond, the benchmark for the region, led most euro zone bonds lower, dropping 4 basis points to 0.32 percent in early trade. - Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2017. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None
