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Sydney - Asian stocks extended a global slide after terrorists struck a crowded tourist street in Barcelona, exacerbating unease triggered by mounting concerns about dysfunction in President Donald Trump’s administration and US policy paralysis.
Equities fell from Tokyo to Sydney after the S&P 500 Index on Thursday tumbled 1.5%, its second-biggest drop for 2017. Volatility in Japan, South Korea and Hong Kong increased after a measure of market fluctuations spiked higher during US trading, while Australian bonds rose with the yen as investors sought havens.
US stocks declined amid concerns Trump’s stimulus plans are in increasing peril and amid heightened terror fears after at least 13 people died when a van ploughed into pedestrians in Barcelona.
Speculation surfaced at one point that Gary Cohn, the former Goldman Sachs Group president who’s Trump’s top economic adviser and has been a figure of assurance to investors in an unorthodox White House, might resign.
Markets were calmed temporarily on reports that Cohn, who has been leading efforts on tax reform, would stay.
It’s been a tumultuous week for the administration, with Trump disbanding two advisory councils staffed by chief executive officers and slamming Republican members of Congress who were critical of his polarizing remarks following violence in Virginia. Meanwhile, the terror news was a reminder that geopolitical risks remain a threat, with nerves still raw after last week’s escalation of tensions on the Korean peninsula.
"The attack in Spain and the rising doubt that Trump will be able to push through with his economic policies are among a series of unfortunate events that’s creating uncertainty for investors to pullback and capitalise on their gains," said Jonathan Ravelas, the chief market strategist at BDO Unibank, the largest Philippine lender.
Still, some investors said the selloff is a temporary development. Neither the terrorist attack in Spain nor political turmoil in the US should create a trend, said Naoki Fujiwara, chief fund manager of Shinkin Asset Management in Tokyo.
"Both the US and Japanese economies are doing well, and what’s most important is the direction of US monetary policy," Fujiwara said. "As long as the fundamentals are steady, the market will recover."
Earlier, European stocks dropped as minutes from the region’s last central bank meeting revealed worries among officials that the currency could overshoot.
Gold and tin were among the best-performing metals, and zinc traded near a 10-year high.
Here are the main moves in markets:
Stocks
Japan’s Topix index fell 1 percent as of 12:49pm in Tokyo, Australia’s S&P/500 Index was down 0.7% and the Kospi index declined 0.2%. Hong Kong’s Hang Seng Index fell 0.7%.
Futures on the S&P 500 rose 0.1% in Asian trading. The Dow Jones Industrial Average fell 1.2% on Thursday and the Nasdaq Composite Index lost 1.9%. The MSCI Asia Pacific Index declined 0.5%.
Currencies
The yen rose 0.1% to 109.42 per dollar, after advancing 0.6% on Thursday. The Bloomberg Dollar Spot Index was little changed. The euro was up 0.1% to $1.1732, after slipping 0.4% on Thursday. The Australian dollar rose 0.2% $78.97 US cents.
Bonds
Yields on 10-year Treasuries were at 2.20%, little changed on the week. Australian 10-year note yields lost more than 2 basis points, to 2.62%.
Commodities
West Texas Intermediate crude was little changed at $47.08 a barrel, heading for a 3.5% slump on the week. Gold was down 0.1% at $1 287.26 an ounce.
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