The US dollar yesterday headed for its worst start to a year since 2008 while world stock losses, already the biggest in six weeks, grew after widespread protests against US President Donald Trump’s stringent curbs on travel to the US.
Investors’ hopes for a fiscal boost to the world’s largest economy under Trump have been tempered by controversial and protectionist policies that have seen him suspend travel to the US from seven Muslim-majority countries.
Thousands took to the streets of major US cities to oppose the travel ban, which also halts refugee arrivals, while marches in Britain added to pressure on British Prime Minister Theresa May to cancel a planned state visit by Trump.
A stream of US policymakers and business executives have also slammed Trump’s stance.
“Investors are becoming worried as it appears as if he was setting fire to geopolitical risks that already exist,” JPMorgan Asset Management global market strategist Yoshinori Shigemi said.
The US dollar edged down against a basket of six major currencies, on track for a 1.9 percent fall this month — its worst start to the year since the 2008 financial crisis.
MSCI’s gauge of the world’s 46 stock markets yesterday lost a further 0.1 percent, adding to a 0.6 percent fall on Monday, which was its largest loss in a month and a half.
“His actions over the last few days is another reminder that there were two sides to his campaign and Trump is just as adamant to follow through on those measures that will likely weigh on market sentiment in the coming months,” OANDA senior market analyst Craig Erlam said.
Eurozone government bond yields edged higher on better-than-expected French and Spanish inflation data for last month.
European bourses clawed back some ground after big losses on Monday after strong results from the likes of British online supermarket Ocado.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6 percent while Japan’s Nikkei dropped 1.7 percent, its biggest fall in almost three months.
MSCI’s ex-Japan Asian shares index was up 5.7 percent this month, while its index of world markets was up 2.5 percent. They were also higher than their levels before the US election.
Sydney shed 0.7 percent and Seoul sank 0.8 percent.
Singapore, Wellington, Manila and Kuala Lumpur were also sharply lower, while Taipei, Hong Kong and Shanghai were closed for the Lunar New Year holidays.
Against the yen, the US dollar fell a further 0.3 percent to ￥113.49. It was down 3.1 percent last month, after three straight months of sizable gains.
The yen showed no reaction after the Bank of Japan kept policy on hold, as expected.
A string of recent data has suggested the Japanese economy is slowly regaining traction.
The US Federal Reserve, which started its two-day policy meeting yesterday, was widely expected to keep interest rates unchanged as it awaits greater clarity on Trump’s economic policies.
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