Stocks slip as doubts over Trump’s growth policies take hold

Most US and European share indexes fell or failed to progress on Wednesday as concerns over potential delays to US president Donald Trump’s pro-growth policies again unnerved investors, while safe-haven gold, US treasuries and the yen rallied.

The benchmark US S&P 500 stock index briefly hit its lowest level in five weeks, while the FTSEurofirst 300 index of top European shares hit a roughly two-week low as investors increasingly worried about whether Trump would be able to push ahead with his pro-growth policies.

The Iseq index in Dublin closed 1 per cent lower.

Mr Trump on Tuesday tried to rally Republican lawmakers behind a plan to dismantle Obamacare, his first major legislation since assuming office in January. Some investors fear that if the healthcare reform act runs into trouble or takes longer than expected to pass, then Mr Trump’s tax reform policies may face setbacks.

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Caution

Caution continued to prevail a day after the S&P 500 closed down 1.2 per cent in its worst daily performance since October 11th. CBOE’s VIX index, known as the “fear gauge”, briefly topped 13 for the first time since mid-January on Wednesday, but was last down 1 per cent at 12.31.

US and European shares were little affected by an attack in London near the British parliament which left several people injured and a number dead.

“The markets were reminded yesterday the ‘Trump trade’ is not a one-way trade and there’s room for disappointment as actions on tax cuts and infrastructure spending might not materialise as quickly as we want,” said Anastasia Amoroso, global market strategist at JP Morgan Private Bank in Houston, Texas on Wednesday.

“The pronounced fall in yields across the world is not helping market sentiment at the moment either.”

MSCI’s all-country world equity index was last down 1.33 points, or 0.3 per cent, at 446.72.

Dow Jones

The Dow Jones Industrial Average was down 34.5 points around the middle of the session, or 0.17 per cent, at 20,633.51. The S&P 500 was up 1.08 points, or 0.05 per cent, at 2,345.1. The Nasdaq Composite was up 12.26 points, or 0.21 per cent, at 5,806.08.

Europe’s broad FTSEurofirst 300 index closed down 0.37 per cent, at 1,475.46.

The cautious mood stoked demand for gold, US government debt and Japanese yen, with spot gold prices touching a three-week high of $1,250.51 an ounce and the dollar hitting a four-month low against the yen of 110.76 yen.

Yields on benchmark 10-year US treasury notes hit a more than three-week low of 2.375 per cent as their prices rallied.

Benchmark Brent crude oil prices fell to a nearly four-month low of $49.71 a barrel and US crude prices hit their own nearly four-month trough of $47.01 a barrel after data showed US crude inventories rising faster than expected, piling pressure on Opec to extend output cuts beyond June.

– Reuters