Asian markets tank as Trump crisis threatens economic agenda

The reports raised questions about whether charges of obstruction of justice could be laid against Trump, weakening confidence in the USA president's ability to push through an aggressive stimulus program that investors had been banking on since his election last November.

The U.S. stock market sold off sharply Wednesday and had its worst day in several months, following reports Trump asked the just-fired FBI director James Comey to drop his investigation of Trump's former national security advisor Michael Flynn.

S&P 500 mini futures, the world's most liquid stock futures, dropped 0.5 percent in early Asian trade. The FTSE 100 index of leading British shares was 0.1 percent lower at 7,519 and near all-time highs.

Trump asked Comey to end a probe into former National Security Adviser Michael Flynn's ties with Russian Federation, according to the reports.

A series of below-par economic readings out of Washington are also adding to dollar selling, while the euro is growing more attractive as political uncertainty in Europe abates and indicators point to a healthy pick-up in growth.

Reports from the White House suggest the administration is becoming more and more chaotic with reports of shouting and yelling behind closed doors.

The US dollar index against a basket of major currencies was down 0.1 per cent at 97.498, not far from a six-month trough of 99.333 reached the previous day. It was on track for its biggest one-day gain since June 2016.US gold futures settled up 1.8 percent at$1,258.70. "There has been a lot of focus on the USA president who admitted that he did share information with Russian Federation", said Greg McKenna, chief market strategist at AxiTrader.

Brent crude futures were down 46 cents, or 1 percent, from their last close at $51.19 per barrel.

The latest developments cast a shadow over Trump's proposed business-friendly policies such as tax cuts and simpler bank regulations, which have underpinned a record-setting rally on Wall Street. Elsewhere in Europe, thin trading and the murky US political outlook dragged down stocks, with the Paris CAC shedding 0.5 percent and Frankfurt's DAX down 0.4 percent.

"Investors need to see if he (Trump) can carry out all of his original ideas, compromise, and get organised", said Kaneo Ogino, director at FX research firm Global-info Co in Tokyo.

Japan's Nikkei shed 1.4 percent, Australian shares lost 1.1 percent and South Korea's KOSPI declined 0.4 percent.

U.S. stocks could be in for a weak Wednesday if index futures are any guide, with S&P 500 e-mini futures down 0.6 per cent as of 12:46pm Tokyo time. However, even if there are enough positive fundamentals to put a floor to the current sell-off, the dollar will likely struggle to find fresh impetus for a renewed upside attempt without any progress to Trump's economic agenda.

The dollar traded above six-month lows against an index of six major currencies on Friday but was down 0.1 percent after gaining some reprieve overnight, helped by solid US economic data.

Benchmark 10-year notes last fell 1/32 in price to yield 2.2173 percent, from 2.216 percent late on Wednesday.

The dollar index rose 0.39 percent, with the euro down 0.57 percent to $1.1094.

In commodities, oil prices were little changed after settling at a two-week high overnight after United States crude inventories declined for the sixth straight week.

  • Zachary Reyes