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New York - Stocks were lower following the S&P 500 Index’s second-biggest selloff of the year, as investors digested the political upheaval in the US and the latest terrorist attack in Europe. Havens like gold and the yen rose.
US shares fell slightly. Stocks in Europe extended their declines after a terrorist attack in Barcelona added to unease about U.S. policy paralysis and lingering tensions over North Korea. Airlines and hotels led the decline of the Stoxx Europe 600 Index. Treasuries gained and the dollar weakened. Core bonds across the euro region rose.
Investors pulled $1.3bn from equity funds in the week ending August 16 as tensions over the Korean peninsula escalated, according to EPFR Global data.
Outflows from US stock funds were triple that, suggesting doubts about Trump’s stimulus plans are an additional worry. Heightened terror fears added to the malaise after at least 13 people died when a van plowed into pedestrians in Barcelona on Thursday.
“The terror attacks in the US and Spain just add to all the other geopolitical mess,” Simon Quijano-Evans, a strategist at London-based Legal & General Investment Management, said in a note to clients. “At some stage that is likely to culminate into a more extreme market reaction.”
The fallout from Trump’s remarks on violence in Charlottesville, Virginia, continues to raise questions about his ability to retain his team and focus on his economic plans. Former Republican presidential candidate Mitt Romney called on Trump to “acknowledge he was wrong” and apologize to the American people. Speculation that former Goldman Sachs.
President Gary Cohn, was poised to resign as head of the National Economic Council roiled markets on Thursday until the White House issued a statement that he was staying.
“Picking fights and getting criticised by members of one’s own party don’t help in pursuing one’s agenda,” Peter Boockvar, chief market analyst at The Lindsey Group, wrote in a note to clients on Friday.
Still, some investors said the selloff is temporary. Neither the terrorist attack in Spain nor political turmoil in the US should create a trend, said Naoki Fujiwara, chief fund manager of Shinkin Asset Management in Tokyo.
“Both the US and Japanese economies are doing well, and what’s most important is the direction of U.S. monetary policy,” Fujiwara said. “As long as the fundamentals are steady, the market will recover.”
Here are the main moves in markets:
Stocks
The S&P 500 was down 0.2% as of 10:10 in New York. The Dow Jones Industrial Average dropped 0.2% and the Nasdaq Composite Index slid 0.1%. The Stoxx Europe 600 Index sank 0.8%. The MSCI All-Country World Index fell 0.3% to the lowest in almost five weeks. Germany’s DAX Index decreased 0.4%. The U.K.’s FTSE 100 Index tumbled 0.9%. The MSCI Emerging Market Index dipped 0.5%.
Currencies
The Bloomberg Dollar Spot Index decreased 0.2%. The euro advanced 0.2% to $1.1743. The British pound gained less than 0.1% to $1.2873. The Japanese yen increased 0.7% to 108.78 per dollar, the strongest in almost four months.
Bonds
The yield on 10-year Treasuries dropped one basis point to 2.17%. Germany’s 10-year yield decreased two basis points to 0.41%. Britain’s 10-year yield fell one basis point to 1.075%.
Commodities
Gold climbed 0.7% to $1 269.56 an ounce. West Texas Intermediate crude fell 0.2% to $47.01 a barrel.
Asia
Japan’s Topix index fell 1.1% at the close, down 1.2% over the week. Australia’s S&P/500 Index ended 0.6% lower. The Kospi index ended 0.1% lower. Hong Kong’s Hang Seng Index fell 0.6%. The MSCI Asia Pacific Index lost 0.4%.
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