Wall St turmoil over Trump fears spreads to Asia

SINGAPORE — Asian stock markets slid yesterday and the greenback was stuck near six-month lows as uncertainty mounted over United States President Donald Trump’s future following reports that he tried to interfere with a federal investigation.

Weighed down by the 373-point plunge or a 1.8 per cent loss in the Dow Jones Industrial Average overnight — the worst session in eight months, Asian markets opened on a weak footing, although bargain hunters emerged to limit losses. Late in Asia, the MSCI Asia Apex 50 Index was down 0.3 per cent after having fallen 1 per cent in early trade.

Risk appetite was impaired by reports that Mr Trump might have asked in February the then–director of the Federal Bureau of Investigation (FBI) James Comey to end an investigation into his former national security adviser Michael Flynn’s alleged links to Russia.

The US Justice Department has named former FBI director Robert Mueller as special counsel to oversee the bureau’s investigation of Russia’s efforts to influence the 2016 US presidential election, as well as possible collusion by Trump campaign associates, and to prosecute any crimes uncovered.

The latest developments have not only thrown doubt over the future of the pro-growth policies that Mr Trump promised, they have even raised the possibility that he could end up leaving the presidency.

“What we do know is this bout of risk aversion is certainly about a giant pushback on the future of tax reform and Mr Trump’s ability to deliver anything has been dealt a massive blow, given the level and magnitude of controversies in play,” said Mr Chris Weston, chief strategist at IG Markets.

Among the key markets in Asia, Japan’s Nikkei-225 led losses as a strong yen hurt the shares of exporters, with the benchmark ending down 1.3 per cent. China’s main benchmark, the Shanghai Composite index fell 0.5 per cent while the Hang Seng Index in Hong Kong shed 0.6 per cent. The Singapore market showed more resilience, with the Straits Times Index ending just 0.1 per cent lower at 3,221.66.

In the currency markets, the US dollar fell as Treasury yields declined after the allegations against Mr Trump lowered economic stimulus hopes. The greenback slipped overnight to give up all its gains since the election of Mr Trump last November, and was flat late in the Asian session at ¥110.85 and at US$1.1145 per euro. Against the Singapore dollar, the greenback was trading at S$1.3910.

Meanwhile, gold prices hovered near a two-week high thanks to the weaker US dollar and the risk aversion gripping the broader markets.

Spot gold rose 0.2 per cent to US$1,263.20 (S$ 1758.55) an ounce, the highest since May 1. Oil prices dipped after settling at a two-week high overnight.

An ongoing effort by the Organisation of Petroleum Exporting Countries to cut production has propped up oil, but prices remain under pressure from still-plentiful supplies. Benchmark Brent crude was down 17 cents at US$52.04 a barrel late in Asia while US crude was down 16 cents at US$48.91. AGENCIES