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Concerns over Trump dent global stocks, dollar

Concern that U.S. President Donald Trump’s reform agenda could be slowed down, and that Trump himself could even face the threat of impeachment, added to disappointing U.S. economic data on Wednesday to hit the dollar and spur a pullback in richly valued stocks.

Reports that Trump asked then-FBI Director James Comey to end a probe into his former national security adviser have raised questions over whether obstruction of justice charges could be laid against the president.

This follows a week of turmoil at the White House after Trump fired Comey and then discussed sensitive national security information about Islamic State with Russian Foreign Minister Sergei Lavrov.

So far, broadly upbeat global growth has underpinned risky assets and supported the multi-year lows in measures of market volatility.

But the retreat in the dollar (DXY), which has now given up all the gains it made following Trump’s presidential election win in November, and a pull-back from record highs for world stocks underscores investor unease about this week’s headlines.

“The Trump issue seems to come in waves, and now we have another wave,” said Hans Peterson, global head of asset allocation, at SEB Investments.

“I have been asked if he is going to be impeached. I think that is the type of discussion some (investors) are having,” Peterson said, pointing out that institutional clients are turning cautious.

U.S. stock futures (ESc1) were off 0.5 percent, though they were still close to record highs.

“It is the ambitiously valued US equity market which needs watching in respect of the long-term risk outlook,” strategists at Morgan Stanley (NYSE:MS) wrote in a note to clients.

At nearly 18 times forward earnings, the S&P 500 (SPX) trades at a significant premium to its long-term average valuations of 15 times, according to Thomson Reuters data.

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