Stocks, US dollar tumble after Trump's economic adviser Cohn steps down

[TOKYO] Early Asia markets, US stock futures and the US dollar slumped on Wednesday after a key advocate for free trade in the White House announced his resignation, fanning fears President Donald Trump would go ahead with tariffs and risk a trade war.

White House economic adviser Gary Cohn, seen as a bulwark against protectionist forces within the Trump administration, said on Tuesday he was leaving.

In Tokyo, the benchmark Nikkei 225 index fell 0.59 per cent to 21,291.26 in early trade while the broader Topix index was down 0.52 perc ent, or 8.85 points at 1,707.45.

In New York, S&P 500 futures dropped more than one per cent in early Wednesday trade.

In the currency market, the dollar fell as much as 0.6 per cent against the yen to 105.48 yen, near its 16-month low of 105.24 touched on Friday.

Against the Swiss franc, the dollar also shed 0.4 per cent to 0.9365 franc, while the euro ticked 0.15 per cent to US$1.2422."The worst outcome for financial markets, in terms of potential to create volatility, would be a confirmation of rising trade friction and benign neglect of the dollar in the short term," said analysts at ANZ.

The Canadian dollar and the Mexican peso tumbled as Cohn's departure was seen as raising risks Washington could walk out of NAFTA.

The Canadian dollar fell 0.4 per cent to C$1.2920 per dollar while the Mexican peso dropped 0.6 per cent to 18.85 to the dollar.

Cohn's resignation poured cold water on a recovery in risk appetite following news on Tuesday that South Korea would hold its first summit with the North in more than a decade.

REUTERS, AFP