Bulls And Bears

White House turmoil spooks Asian markets

Resignation of Trump's pro-trade economic adviser drives markets down

Local investors learnt again yesterday that they cannot ignore the drama in the White House.

The market here, along with its Asian peers, was jolted by news that United States President Donald Trump's top economic adviser Gary Cohn has quit.

The resignation of "Globalist Gary", as he is nicknamed, rekindled concerns over Mr Trump's decision to impose punishing tariffs on steel and aluminium.

Mr Cohn was the last powerful voice in the Oval Office arguing against the tariffs and Mr Trump's threats to break up the North American Free Trade Agreement.

His departure is a sign of defeat for the pro-free trade crowd.

"His resignation increased the risk tenfold that President Trump will follow through with far-reaching trade tariffs," said Mr Stephen Innes, head of Asia-Pacific trading at Oanda.

The unease sent the benchmark Straits Times Index down 41.23 points, or 1.18 per cent, to 3,450.69, with 2.6 billion shares worth $1.5 billion traded. There were 155 gainers to 309 losers.

Yoma Strategic Holdings rose 4 per cent to 44.5 cents in intra-day trade before closing at 42.5 cents - up 0.5 cent. Analysts liked its planned acquisition of a 34 per cent stake in a Myanmar mobile payments operation.

Creative Technology took a breather from recent gains to close down $1.22, or 14.7 per cent, at $7.08, on news that Apple is also looking at competing in the high-end audio space, after its AirPods earphones turned out to be a surprise hit.

Creative founder Sim Wong Hoo believes he has developed the holy grail of headphone audio in the Super X-Fi product, which promises to deliver a "three-dimensional" listening experience.

The US markets were closed when news of Mr Cohn's imminent departure broke, but traders sent the Dow futures - a predictor of where the market will open - tumbling.

S&P 500 futures dropped more than 1 per cent and set the downbeat tone for Asia yesterday.

The prospect of increased protectionism overshadowed developments on North Korea, which has indicated a willingness to discuss denuclearisation with the US.

DBS Group Research said all eyes will be on the US Federal Reserve, which will release a summary of economic conditions based on reports from various Fed district banks.

This will serve as an early glimpse into what action will be taken on interest rates at the next Fed meeting on March 20 and 21.

A version of this article appeared in the print edition of The Straits Times on March 08, 2018, with the headline 'White House turmoil spooks Asian markets'. Print Edition | Subscribe