World stocks were spooked yesterday by Donald Trump’s controversial travel ban, which dealers said may be an early taste of coming turmoil prompted by the US president.
Asian and European equities kicked off the downward spiral and were joined by Wall Street, with the Dow index waving goodbye to the 20,000 level it breached for the first time last week.
Indices in key European stock exchanges and New York all lost around 1%.
London’s FTSE 100 lost 0.9% at 7,118.48 points, the DAX 30 was down 1.1% at 11,681.89 and CAC 40 lost 1.1% at 4,784.64 at close yesterday.
Markets were “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.
Investors are beginning to lose confidence in Trump’s ability “not to cause damage to the US economy”, he said.
The newly-installed US president on Friday signed an executive order banning entry to travellers from seven Muslim-majority countries that was met with widespread outrage from world leaders and mass global protests.
There was “an air of caution” on stock markets which had seen major rallies after Trump’s election based on fiscal promises, noted Jameel Ahmad, an analyst at FXTM.
He said it was difficult to believe “that investors are not now reconsidering what damage Trump might do by implementing other promises that supplemented an incoherent and ranting political campaign”.
In foreign exchange, the dollar dived against its major peers on the back of Trump woes in Asian business, but then bounced back during the European trading day.
Trump’s immigration move saw “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.”
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 the crowd size at his inauguration 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.
But Monday investors were no longer sure. “Trump jitters finally entering the market,” tweeted Mati Greenspan, an analyst at eToro, after Wall Street opened lower.
A trader monitors stock prices at the London Stock Exchange. The FTSE 100 yesterday lost 0.9% to 7,118.48 points after Donald Trump’s controversial travel ban.
