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US: Stocks fall most since election as Trump woes mount
[NEW YORK] US stocks tumbled on Wednesday on worries that President Donald Trump's mounting missteps imperil his economic growth agenda, with major indices falling the most since his election.
Wall Street stocks were in the red all day as reports that Mr Trump asked former FBI chief James Comey to stop a probe into ex-national security advisor Michael Flynn over his contacts with Russia stoked questions about how an embattled White House will advance tax cuts and other growth measures that have boosted stocks.
The dollar also skidded, while bourses in Europe and Asia also stumbled.
Analysts described the market response as a classic flight-to-safety, with funds leaving riskier investments like stocks and moving to gold and bonds.
Expectations about tax cuts and other key Trump growth agenda items have "meaningfully changed" in the wake of the negative stories, said Alexander Kazan, managing director of global strategy and analytics, Eurasia Group.
"You have much more of a sense of uncertainty about the future of the Republican agenda in Congress."
"The turmoil in Washington has begun to hit markets," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "We don't know how this will end, but we do know that it isn't going away quickly."
DOUBTS ABOUT TRUMP AGENDA
The Dow finished down 373 points at 20,606.93 for a drop of 1.8 per cent - its biggest one-day decline since Mr Trump was elected.
Banking stocks were hit hard, while big technology names, including Apple and Facebook, fell more than three per cent.
Reports of Mr Trump's alleged pressure on Mr Comey - and that Mr Comey noted it in a memo - raised concerns that Trump could be accused of obstruction of justice, a potentially impeachable offence.
The Comey revelations came on the heels of widespread criticism of Mr Trump for allegedly disclosing highly sensitive intelligence to Russian officials last week.
"What's changed in the last two weeks is a realization that what's going on in the White House is potentially more than just inexperience, the sort of normal adjustment period that any administration has," said Mr Kazan.
"What we are sensing that there is much more concern that ultimately these signs of dysfunction in the White House may wind up being consequential." Analysts noted that US stocks remained near all-time highs following strong corporate earnings and better economic data, meaning that some of Wednesday's selling was due to profit-taking.
Among other large stock markets, Frankfurt and Paris both lost about 1.5 per cent.
London fell 0.3 per cent, performing better than its eurozone peers on the back of figures showing that Britain's unemployment rate had fallen to a 32-year low, but economists worried about slow wage growth.
The euro rose to its highest value against the dollar since just after the presidential election, as currency markets reevaluated the prospects for the Trump agenda.
"Mounting uncertainties on the political and economic fronts have cast a palpable pall over the dollar's short run prospects," said Joe Manimbo, analyst at Western Union Business Solutions.
"Until a sense of stability is restored in Washington, there is no telling how much of a toll it could take on dollar sentiment."