Most US and European share indexes fell or were little changed yesterday as concerns over potential delays to President Donald Trump’s pro-growth policies again unnerved investors, while safe-haven gold, US Treasuries, and the yen rallied.
The benchmark US S&P 500 stock index briefly hit its lowest level in five weeks, while the FTSEurofirst 300 index of top European shares hit a roughly two-week low as investors increasingly worried about whether Mr Trump would be able to push ahead with his pro-growth policies.
Mr Trump on Tuesday tried to rally Republican lawmakers behind a plan to dismantle Obamacare, his first major legislation since assuming office in January. Some investors fear that if the healthcare reform act runs into trouble or takes longer than expected to pass, then Mr Trump’s tax reform policies may face setbacks.
Caution continued to prevail a day after the S&P 500 closed down 1.2 percent in its worst daily performance since Oct. 11. CBOE’s VIX index, known as the “fear gauge”, briefly topped 13 for the first time since mid-January yesterday, but was last down 1 per cent at 12.31.
US and European shares were little affected by an attack in London near the British parliament which left several people injured and, according to Sky News, two people dead.
“The markets were reminded yesterday the ‘Trump trade’ is not a one-way trade and there’s room for disappointment as actions on tax cuts and infrastructure spending might not materialize as quickly as we want,” said Anastasia Amoroso, global market strategist at JP Morgan Private Bank in Houston.
“The pronounced fall in yields across the world is not helping market sentiment at the moment either.”
MSCI’s all-country world equity index was last down 1.33 points, or 0.3 per cent, at 446.72.
The Dow Jones Industrial Average was last down 34.5 points, or 0.17 per cent, at 20,633.51. The S&P 500 was up 1.08 points, or 0.05 per cent, at 2,345.1. The Nasdaq Composite was up 12.26 points, or 0.21 per cent, at 5,806.08.
Europe’s broad FTSEurofirst 300 index closed down 0.37 per cent, at 1,475.46.
The cautious mood stoked demand for gold, US government debt, and the Japanese yen, with spot gold prices touching a three-week high of $1,250.51 an ounce and the dollar hitting a four-month low against the yen of 110.76 yen.
Yields on benchmark 10-year US Treasury notes hit a more than three-week low of 2.375 per cent as their prices rallied.
Benchmark Brent crude oil prices fell to a nearly four-month low of $49.71 a barrel and US crude prices hit their own nearly four-month trough of $47.01 a barrel after data showed US crude inventories rising faster than expected, piling pressure on Opec to extend output cuts beyond June.