US and European stocks fell yesterday, along with the US dollar, while US Treasury yields reversed earlier declines, as political uncertainty in the United States sent investors in search of safer investments like gold and the Japanese yen.
The dollar fell to a session low against the yen and gold gained in US morning training.
Investors were concerned about developments relating to the firing of FBI Director James Comey on Tuesday by US President Donald Trump.
White House officials told Reuters Mr Trump’s decision had been building for months, but a turning point came when Mr Comey refused to preview for top Trump officials his planned testimony to a Senate panel, a decision considered an act of subordination by Mr Trump and his aides.
“The market has continued to get a little bit ahead of itself and it’s just looking for any sort of a reason to have a pullback,” said Catherine Avery, president of Catherine Avery Investment Management in New Canaan, Connecticut.
“Part of it is worry the distraction that we’ve had with James Comey is going to take people’s eyes off the tax reform and health care reform.”
The US benchmark S&P 500 stock index was on track for its largest one-day percentage fall in four weeks.
A disappointing profit report by Macy’s and ensuing 13 per cent slump in its shares took a toll on the US consumer discretionary sector.
The Dow Jones Industrial Average fell 86.16 points, or 0.41 per cent, to 20,856.95, the S&P 500 lost 11.82 points, or 0.49 per cent, to 2,387.81 and the Nasdaq Composite dropped 32.95 points, or 0.54 per cent, to 6,096.19.
A gauge of global stock markets fell 0.35 per cent.
Wall Street’s losses pushed US Treasury yields lower after touching their highest levels since March ahead of a $15 billion auction of 30-year bonds.
The pan-European STOXX 600 index fell 0.5 per cent, weighed by financials. Asia-Pacific shares outside Japan rose 0.4 per cent and Japan’s Nikkei rose 0.3 per cent yesterday.
MSCI’s emerging markets index continued to shine, boosted by a second day of strong oil price gains, and was headed towards its highest level in two years. The index has gained 15.4 per cent year to date, more than doubling the 2017 gains of the S&P.
“We are seeing relief with commodity prices trading higher,” said Piotr Matys, emerging markets FX strategist at Rabobank.
But he added these were likely to be short-term gains as commodity prices could weaken again.
Iron ore futures in China dipped to a four-month low on Wednesday before recovering at the close.