Markets Insights

Trump turmoil may dull Asian markets

White nationalists clashing with counter-protesters in Charlottesville, Virginia, on Aug 12. US President Donald Trump's comments about the deadly violence have sent the White House into further disarray and prompted corporate leaders to resign from
White nationalists clashing with counter-protesters in Charlottesville, Virginia, on Aug 12. US President Donald Trump's comments about the deadly violence have sent the White House into further disarray and prompted corporate leaders to resign from his business advisory panels.PHOTO: NEW YORK TIMES

Traders will monitor fallout, speeches from ECB and US Fed, and local data due to be released

After a decidedly gloomy closing last week, regional traders are likely to be eyeing the markets warily today, especially since issues that have been dampening sentiment are far from resolved.

One major factor behind declines in markets around the world last week was the apparent disarray in United States President Donald Trump's White House.

In the continuing fallout over controversial comments that he made about a white nationalist protest in Virginia, several business leaders resigned from his advisory councils - which he later disbanded - and a White House official said that plans for a council on infrastructure had been dropped.

This has cast doubt on whether Mr Trump's planned tax cuts and infrastructure spending will happen.

The chaos has only worsened, with news over the weekend that his chief strategist Stephen Bannon has been pushed out.

The news, which broke during Wall Street trading last Friday, caused stocks to soar at first, before they tumbled back into the red.

The Dow Jones Industrial Average dropped 0.35 per cent and was down nearly a full percentage point for the week, while the broader S&P 500 fell nearly 0.2 per cent and the tech-heavy Nasdaq slipped less than 0.1 per cent.

RISING DOUBTS OVER TRUMP

While this mini-correction we're seeing might not amount to much, it's probably caused by this escalation in doubt about all of these things that seemed hopeful to investors at the start of the Trump administration.

MR J. BRYANT EVAN, a Chicago-based investment adviser and portfolio manager at Cozad Asset Management, on the effect of negative news on markets last week.

"While this mini-correction we're seeing might not amount to much, it's probably caused by this escalation in doubt about all of these things that seemed hopeful to investors at the start of the Trump administration," said Mr J. Bryant Evan, a Chicago-based investment adviser and portfolio manager at Cozad Asset Management, in an interview with Reuters.

There will certainly be more news to keep investors occupied this week.

Mr Kelvin Wong, who is chief technical strategist for Asia at City Index, noted that, from Thursday, traders will turn their attention to key speeches from the European Central Bank and the US Federal Reserve, which will be holding its annual symposium at Jackson Hole in Wyoming.

"The focus will be the views of these key central bankers on the economic growth prospects for their respective countries, as such views can be used to gauge the pace of normalising previously loose monetary policies," said Mr Wong.

There has been some angst on this front as well, as the Fed's last meeting showed members divided over the pace of interest rate rises.

On the home front, investors also have some economic data to watch for, as Singapore's inflation figures will be released on Wednesday and business receipts and manufacturing data on Friday.

A version of this article appeared in the print edition of The Straits Times on August 21, 2017, with the headline 'Trump turmoil may dull Asian markets'. Print Edition | Subscribe