Asian and European stock markets sank on Monday with dealers spooked by uncertainty over Donald Trump’s divisive immigration ban, dealers said.
The newly-installed US president on Friday signed an executive order banning travellers from seven Muslim-majority countries that was met with widespread outrage from world leaders and mass global protests.
“Global indices have started on the back foot after US President Trump announced one of his most radical policies yet, in the form of a travel ban,” said CMC Markets analyst Michael Hewson.
“The resulting press criticism and mass protests appear to have pushed some investors to the sidelines as rising uncertainty in the ability of the president not to cause damage to the US economy starts to increase, and uncertainty rarely bodes well for financial markets.
“This uncertainty has filtered across into European markets,” Hewson added.
In foreign exchange, the dollar dived against its major rivals on the back of Trump woes, while Asian markets were subdued in holiday-thinned trade.
A disappointing reading on US economic growth added to the downbeat sentiment with Wall Street ending last week on a negative note.
“The main focus over the weekend has been Trump’s immigration policy and it won’t necessarily surprise to see some heat coming out of the dollar,” said IG market strategist Chris Weston.
“Whether the markets start to price in a stronger Trump risk premium is yet to be seen.”
– Resilience –
Analysts said markets have shown resilience despite a series of controversial moves by Trump in his first week in office, including a row with Mexico over trade and his proposed border wall, rows with the media over his inauguration crowds and unsupported assertions that millions of people voted illegally in the 2016 election.
This was put down to hopes he will stick to his promise to ramp up infrastructure spending, cut taxes and slash red tape to boost economic growth and corporate profits.
Eyes are now on the Friday release of US jobs data for January, which comes a week after figures showing US growth reached a sluggish 1.9 percent in October-December, well below the 3.5 percent in the third-quarter and below expectations.
The weak figures helped dampen sentiment on Wall Street, where the Dow edged lower Friday, at the end of a week in which it broke 20,000 points for the first time.
– Key figures around 1130 GMT –
London – FTSE 100: DOWN 0.7 percent at 7,133.90 points
Frankfurt – DAX 30: DOWN 0.8 percent at 11,720
Paris – CAC 40: DOWN 0.9 percent at 4,797.30
EURO STOXX 50: DOWN 0.9 percent at 3,274.90
Tokyo – Nikkei 225: DOWN 0.5 percent at 19,368.85 (close)
Sydney – S&P/ASX 200: DOWN 0.9 percent at 5,661.50 (close)
Hong Kong – Hang Seng: Closed
Shanghai – Composite: Closed
New York – Dow: DOWN 7.13 points at 20,093.78 (close)
Euro/dollar: DOWN at $1.0694 from $1.0696
Pound/dollar: UP at $1.2630 from $1.2549
Dollar/yen: DOWN at 114.25 yen from 115.06 yen
Oil – West Texas Intermediate: DOWN four cents at $53.13 per barrel
Oil – Brent North Sea: DOWN nine cents at $55.43