Naharnet

Head-Scratching Investors Call Time on Trump Stock Rally

World equity markets were under pressure Friday as analysts ran out of ways to justify Donald Trump inspired stock valuations, but some said the party may not be completely over.

The dollar stuttered, while Wall Street, Asian and European markets fell after Treasury Secretary Steven Mnuchin lowered U.S. growth expectations and appeared to temper Donald Trump's belligerence towards China's currency policy.

"The sell-off accelerates," observed Michael van Dulken, an analyst with Accendo Markets.

"The signs were there for a stock market plunge, which is exactly what has happened today," said Fawad Razaqzada, an analyst at Forex.com. "Is this the start of the crash that many people had been waiting for? Well, that remains to be seen."

European stocks extended early losses as soon as index futures pointed to a weaker opening on Wall Street.

At the opening bell, New York indeed capped a winning streak that had seen the New York market through 10 straight record-breaking sessions while global investors looked on in "awe and disbelief" as Mati Greenspan, Senior Market Analyst at eToro, put it.

"Many analysts feel that this has been overdone but most agree that it could very well continue for a while," he said.

But for now, the Trump-fueled global rally is showing signs of petering out with analysts suggesting the exuberance about hoped-for spending and tax cuts may have been overdone.

- 'Dangling' -

That appeared evident after Mnuchin forecast three percent growth by the end of next year, warning that the effect of certain measures would take time. That compared with the four percent Trump promised on the campaign trail. 

In an interview with CNBC, Mnuchin also appeared to wind back on his boss's earlier threats to call China a currency manipulator, easing concerns about a possible trade stand-off between the world's top two economic powers.

Stephen Innes, senior trader at OANDA, said in a note the comments "have left investors dangling about the U.S. administration's currency policy as there appears to be a subtle shift in the Trump administration's rhetoric."

The comments overshadowed his promise to push through tax cuts by August, and pursue deregulation on companies and banks.

- Dollar retreats -

The dollar lost some of its recent shine, another sign that cracks may be appearing in investors' belief that U.S. economic strength will make them richer day after day.

In corporate Europe, some heavyweights saw heavy losses in response to annual results.

Vivendi in Paris dropped nearly four percent after posting a 35-percent decline in net profit.

Royal Bank of Scotland shares dropped more nearly six percent in London after the bank's net loss widened to £7 billion in 2016.

Frankfurt heavyweight BASF shed close to three percent after the chemicals giant reported a "challenging" 2016, leaving it just "cautiously optimistic" for the current year.

- Key figures around 1455 GMT -

London - FTSE 100: DOWN 0.7 percent at 7,222.63

Frankfurt - DAX 30: DOWN 1.4 percent at 11,786.10

Paris - CAC 40: DOWN 1.1 percent at 4,835.86

New York - Dow: DOWN 0.2 percent at 20,767.58

Tokyo - Nikkei 225: DOWN 0.5 percent at 19,283.54 (close)

Hong Kong - Hang Seng: DOWN 0.6 percent at 23,965.7 (close)

Shanghai - Composite: UP 0.1 percent at 3,253.43 (close)

Euro/dollar: DOWN at $1.0557 from $1.0579

Pound/dollar: DOWN at $1.2506 from $1.2556

Dollar/yen: DOWN at 112.42 yen from 112.67 yen

Oil - West Texas Intermediate: DOWN 43 cents at $54.02 per barrel

Oil - Brent North Sea: DOWN 50 cents at $56.32

Source: Agence France Presse


Copyright © 2012 Naharnet.com. All Rights Reserved. https://www.naharnet.com/stories/en/225987