Trump travel ban sparks dollar weakness

New York - The dollar headed lower and Asian stocks declined as traders digested the tensions sparked by Donald Trump’s order halting some immigration, a move that’s ignited opposition from world leaders. Bonds rose with gold.

The greenback weakened against all its major peers, trading near the lowest levels in two months. Stocks in Japan and Australia dropped with S&P 500 index futures, while markets in Hong Kong, China, Malaysia, Korea, Singapore, Taiwan and Vietnam are among those closed for holidays. Australian 10-year bonds climbed with gold. Oil dropped for a second day.

Trump’s executive order halting immigration from seven predominantly Muslim nations drew criticism from world governments and some of the largest companies, bringing the geopolitical and international trade risks surrounding the new US president into sharper focus. 

His order was curbed by a Boston federal judge, who directed customs officials at the city’s Logan International Airport to allow passengers from those countries with valid visas to deplane there and go on their way.

“The main focus over the weekend has been Trump’s immigration policy and it won’t necessarily surprise to see some heat coming out of the dollar in early trading,” said Chris Weston, Melbourne-based chief market strategist at IG. 

“Whether the markets start to price in a stronger Trump risk premium is yet to be seen.”

Meanwhile, here’s what’s coming up this week:

Apple, Facebook and Amazon.com are among the major US companies due to report results. 

Of the 219 S&P 500 names to report so far, 73% have topped profit estimates. Japan will see earnings from heavy hitters including Sony and Honda Motor. The first US jobs report of the year is due on February 3, while China manufacturing and services industry data are scheduled for February 1. 

The Federal Reserve holds a policy meeting on February 1 and the Bank of Japan convenes. Neither is expected to change lending rates, though the Fed’s statement will be parsed for any reading on Trump’s impact on the world’s largest economy.

Here are the main moves in markets on Monday:

Currencies

The Bloomberg Dollar Spot Index dropped 0.3%. The yen gained 0.6% to 114.36 per dollar as of 12:35 p.m. in Tokyo. The Swiss franc climbed 0.3% to 0.9966 per dollar. The kiwi strengthened 0.1% to 72.69 U.S. cents.

Stocks

Australia’s S&P/ASX 200 Index lost 1%, dragged down by technology shares.  Japan’s Topix index slid 0.7%, led by a drop in banks and exporters. The gauge advanced 1% last week, trading near the highest since December 2015. S&P 500 futures dropped 0.3% after the underlying gauge gained 1 percent last week.

Bonds

The yield on 10-year Australian government bonds slid 5 basis points to 2.73%. U.S. Treasury 10-year yields fell 2 basis point to 2.47%.

Commodities

Gold rose 0.3% to $1,194.62. Oil futures dropped 0.4% to $52.98 a barrel amid speculation increases in U.S. drilling will boost output and curtail the effects of supply cuts made by OPEC and other producers.