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European stocks shaky as Trump turmoil and terror hits markets

What you need to know

  • European stocks unsettled by US political turmoil
  • Yen strengthens against greenback
  • Flight to quality sees German Bunds rally
  • Gold enjoys “haven” bounce

European stocks are lower on Friday, with the Stoxx 600 falling 0.8 per cent, as a global flight from riskier assets on the back of political turmoil in the US rumbles on. The continent’s banking stocks are softer as bond yields fall and the travel and leisure sector sub-index dips 1.3 per cent following terrorist incidents in Spain.

Hot topic
The S&P 500 suffered its biggest one-day fall since May, down 1.5 per cent at the close on Thursday, as business leaders fled Mr Trump’s business councils over his handling of white supremacist violence at the weekend.

Fears grew that the resignations would soon also include Gary Cohn — who left his role as chief operating officer of Goldman Sachs to become Trump’s chair of the National Economic Council at the start of the year. While Mr Cohn did not resign, the uncertainty over his position was widely blamed for the slip in stocks.

“Why were US markets shaky overnight? During US time, the market had no definitive evidence that White House Economic Advisor Gary Cohn is unhappy in his job or debating resignation, but that didn’t stop investors from launching a full risk aversion campaign,” Citi’s FX analysts said on Friday.

That fall had a knock-on effect as trading began in Asia, though indices pared losses as the day went on. Japan’s Topix index fell 1.1 per cent and Australia’s S&P/ASX 200 pulled back from a 1.2 per cent fall at the open to finish down 0.6 per cent as banks came under pressure.

In Hong Kong, Chinese personal computer maker Lenovo was one of the worst performers on the benchmark Hang Seng index, falling 3.5 per cent after it reported an unexpected net loss in the first quarter. The HSi is down 0.7 per cent as the financials and real estate sectors suffered.

The flight to haven assets — sparked by the US political turmoil and the attack in Spain — sees the Japanese yen strengthen 0.5 per cent to ¥109.02 per dollar.
The dollar index, a measure of the currency against a basket of its peers, is down 0.15 per cent at 93.486.

The euro is up 0.2 per cent to $1.1751 after hitting a three-week low against the dollar on Thursday after the European Central Bank’s minutes released on Thursday highlighted worries about the strength of the single currency.

Fixed income
The retreat from riskier assets sees a rally in the 10-year German Bund, with yields dropping 2 basis points to a 0.42 per cent. Bond yields move inversely to price

The move in German government bonds tracked a fall in US Treasury yields overnight, though the new session sees the US benchmark 10-year steady at 2.20 per cent ahead of consumer sentiment data due at 15:00 BST.

Brent crude, the international energy benchmark, is up 0.4 per cent at $51.21 a barrel after rallying 1.5 per cent on Thursday. West Texas Intermediate, the main US contract, is adding 0.4 per cent to $47.28 a barrel.

Gold is benefiting from haven buying, the bullion adding $6 to $1,293 an ounce, just a fraction below its most expensive level since November.

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