SEOUL, South Korea (AP) — Global stock markets fell Wednesday after the surprise departure of President Donald Trump’s top economic adviser, who was the administration’s leading internal opponent of his planned tariffs on imports of steel and aluminum.
KEEPING SCORE: Britain’s FTSE 100 was flat at 7,146.10 but France’s CAC 40 fell 0.5 percent to 5,144.61 while Germany’s DAX lost 0.4 percent to 12,069.84. Futures augured big losses on Wall Street. Dow futures sank 1.3 percent while S&P futures tumbled 1 percent.
ASIA’S DAY: Asian markets started flat but losses widened in the afternoon. Japan’s Nikkei 225 dropped 0.8 percent to 21,252.72 while South Korea’s Kospi fell 0.4 percent to 2,401.82. Hong Kong’s Hang Seng index sank 1 percent to 30,196.92 while the Shanghai Composite Index retreated 0.6 percent to 3,271.67. Australia’s S&P/ASX 200 sank 1 percent to 5,902.00. Stocks in Southeast Asia were mostly lower.
TRADE: Gary Cohn, the director of the National Economic Council, announced his departure in a blow to Republicans and business groups who were hoping Trump might heed their concerns about his tariffs plan. Trump has been resisting calls to reverse his stance and has said he will impose tariffs in coming days.
ANALYST’S TAKE: “For the markets, Gary Cohn’s departure certainly points strongly to the likelihood that little can halt the President from going ahead with his tariff plans and may mark more volatility to come for markets,” said Jingyi Pan, a market strategist at IG in Singapore. “Perhaps the biggest thing to look forward to on this topic will be the details of the plans at the moment, to gain a better gauge of the extent of the impact, whereupon more volatility may be unleashed.”
OIL: Benchmark U.S. crude lost 73 cents to $61.86 per barrel in electronic trading on the New York Mercantile Exchange. The contract added 3 cents to finish at $62.60 a barrel on Tuesday. Brent crude, used to price international oils, fell 87 cents to $64.92 per barrel in London. In the previous session, it rose 25 cents to $65.79 a barrel in London.
CURRENCIES: The dollar fell to 105.61 yen from 106.15 yen. The euro rose to $1.2422 from $1.2406.
– Here are the top five things you need to know in financial markets on Wednesday, March 7:
1. Cohn Resigns As Trump’s Top Economic Advisor
Gary Cohn, widely viewed as a voice for Wall Street in the White House, announced his resignation as the top economic adviser to U.S. President Donald Trump, fanning fears that the Trump administration will proceed with tariffs and risk a trade war.
The departure of Cohn as the National Economic Council Director was announced after markets closed on Tuesday and came after he lost a fight with Trump’s protectionist advisors on the issue of tariffs.
Trump announced plans last week to impose imports tariffs of 25% on steel and 10% on aluminum, something Cohn argued against.
Trump said in a tweet on Tuesday night he “will be making a decision soon” on replacing Cohn, with a decision expected to be finalized in a few weeks.
Administration officials said Peter Navarro, who is director of the White House National Trade Council, and conservative commentator Larry Kudlow were the “top two candidates” for the job.
2. Global Stocks Slump As Cohn’s Exit Rattles Sentiment
Global stocks were under pressure, as Cohn’s resignation fueled concerns that the Trump Administration will have a free hand to pursue a protectionist agenda, raising the chances of a full-blown trade war.
Asian shares ended broadly lower, with losses in the region led by Japan’s benchmark Nikkei, which ended down about 0.8%. The index had pared losses of around 1% earlier in the day to hover around the flat line, before sliding once again.
In Europe, nearly all the continent’s major bourses traded in negative territory, with the pan-European Stoxx 600 index, the region’s broadest measure of share prices, falling around 0.5%, with most sectors in the red.
Meanwhile, on Wall Street, U.S. stock futures pointed to a sharply lower open. Dow futures were down 320 points, or 1.3%, from their Tuesday close, while S&P 500 futures lost 28 points, or 1%, and Nasdaq 100 futures declined 66 points, or roughly 1%.
On the earnings side, retailers Dollar Tree (NASDAQ:DLTR) and Abercrombie & Fitch (NYSE:ANF) will report results before the opening bell, while Costco (NASDAQ:COST) and Caesars Entertainment (NASDAQ:CZR) are due after the close.
U.S. stocks eked out a small gain on Tuesday after a choppy session, with the Dow ending 9 points higher after briefly falling as much as 166 points, as investors worried about the prospects of a trade war.
3. US Data, Fed Speakers Ahead
After a broad lack of catalysts on Tuesday, investors will have a busier economic schedule to deal with.
The highlight of Wednesday’s economic calendar will be the ADP jobs report at 8:15AM ET (1315GMT), which is often seen as a warmup act for the big Friday government nonfarm payrolls report. Expectations are 195,000 private jobs were created in February.
A report on the trade deficit in January is scheduled to arrive 15 minutes later, with a reading of a $52.6 billion deficit forecast. Also coming at 8:30AM ET (1330GMT) are fourth-quarter updates on productivity and unit labor costs.
The latest Beige Book from the Federal Reserve will be published at 2PM ET (1900GMT).
Markets will also be paying close attention to comments from a pair of Fed speakers today for their views on the recent uptick in inflation and how that can affect monetary policy.
Atlanta Fed President Raphael Bostic is scheduled to give a speech on the economic outlook in Fort Lauderdale at 8:00AM ET (1300GMT).
Shortly afterwards, New York Fed President William Dudley will speak about the economic impact of the 2017 hurricanes, in San Juan, Puerto Rico at 8:20AM ET (1320GMT).
The U.S. dollar index, a measure of the greenback against a basket of six global currencies, extended its latest retreat to 89.38, its lowest in two weeks, while benchmark 10-year U.S. Treasury note yields crept lower to 2.859%.
4. Oil Prices Under Pressure Ahead Of EIA Supply Data
The U.S. Energy Information Administration will release its weekly report on oil supplies at 10:30AM ET (1530GMT), amid analyst expectations for a gain of 2.7 million barrels.
The American Petroleum Institute said late Tuesday that U.S. oil inventories rose by 5.7 million barrels in the week ended March 2. There are often sharp divergences between the API estimates and the official figures from EIA.
Oil prices were on the backfoot, with U.S. WTI crude futures slipping 72 cents, or 1.2% to $61.88 per barrel, while London-traded Brent crude futures were at $64.94 per barrel, down 83 cents, or 1.3%.
5. Bitcoin Prices Sink Back Towards $10,000-Level
Bitcoin prices slumped back towards the $10,000-level, amid broad weakness in the cryptocurrency market. The world’s biggest virtual currency by market cap fell around 7% to $10,472, marking a loss of more than $800 (BTC/USD).
Bitcoin’s latest retreat comes as the digital currency neared price levels – between $11,000 and $12,000 – said to offer strong technical resistance – trading levels that trigger selling.
Some also cited the move lower as a reaction to reports that the South Korea banned all government officials from holding and trading cryptocurrencies.
Other major cryptocurrencies also traded lower, with Ethereum, the world’s second largest cryptocurrency by market cap, sliding about 8.5% to $776.79.
The third largest cryptocurrency Ripple sank roughly 10% to trade at $0.88186.