World stocks markets, on Friday, August 18, were set for a second day of losses after an exodus of U.S. executives from presidential business councils dealt a fresh blow to hopes of tax reform, hammering Wall Street and filtering through to Asia and Europe.
Investors fled instead into German and U.S. Treasury bonds and bought gold for the third day in a row, as the appeal of such top-notch assets grew further due to a deadly attack that killed at least 13 people in Barcelona.Markets have been dismayed by U.S. President Donald Trump’s latest controversial comments on violence that flared in Charlottesville, Virginia, after a white nationalist protest.Several business leaders have since resigned from his advisory councils and a White House official said plans for a council on infrastructure had been dropped.These events, which also alienated some of Trump’s Republican allies, have dashed hopes for tax cuts and infrastructure spending, campaign promises that fueled much of this year’s gains in world stocks, emerging markets and commodities.
Equities worldwide are still on track to end the week in the black as fears ebbed earlier in the week that the United States and North Korea were headed for a nuclear standoff.But with New York’s equity indexes all tumbling on Thursday to multi-week lows, MSCI’s index of Asian shares outside Japan fell 0.6 percent .MIAPJ0000PUS on Friday, emerging stocks lost half a percent and MSCI’s world index .MIWD00000PUS, which tracks shares in 46 countries, slipped 0.3 percent to one-week lows .MIWD00000PUS.“In a week where we started by worrying about nuclear war, markets have quickly moved on from this, with yesterday’s weak session more of a response to fears that Mr Trump’s strategy for the economy and business is falling apart and later the terrible terrorist attack in Barcelona,” Jim Reid, a strategist at Deutsche Bank, told clients in a note.
The pan-European STOXX 600 index opened 0.9 percent lower. Losses were led by travel and leisure .SXTP as investors reacted to the Barcelona attack by selling shares in airlines such as Ryanair (RYA.I), EasyJet (EZJ.L) and Spanish airport firm AENA (AENA.MC).U.S. equity futures signaled a weaker opening on Wall Street too 1YMc1 ESc1 NQc1.Equity weakness is heaping more pressure on the dollar, pushing it down 0.5 percent against the yen JPY=, the lowest in a week and approaching one-year lows of 108.13 yen hit in April.ING Bank analysts predicted the dollar would remain pinned near current levels, at the expense of the yen.“Tail risks such as geopolitics, protectionism and the unwind of easy central bank money all provide valid reasons to remain cautious in chasing risk,” they told clients.“Dollar/yen continues to capture this nervousness and could move down towards the 109.00 level.
”The turmoil also benefited gold, with spot prices for the metal rising 0.4 percent to the highest in more than two months XAU= and on track for its second week of gains.Brent crude futures rose 0.35 percent, rising off three-week lows hit on Thursday as the dollar continued to weaken and signs appeared that supply is becoming tighter in the world’s biggest energy consumer, the United States.