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Global stocks shrug off Trump's sacking of FBI chief

May 11 2017 07:50

New York - Wall Street stocks took news of US President Donald Trump's shock firing of FBI director James Comey in stride Wednesday, with the S&P 500 and Nasdaq finishing with modest gains.

Analysts were surprised markets didn't react more to the Comey firing, which has raised echoes of Watergate, the 1970s political scandal that ended Richard Nixon's presidency. The FBI is investigating Russian ties to the White House, and Comey had reportedly asked for more funds to pursue the case.

"The big story of the day really is the market is taking the Comey firing pretty well, considering it further decreases the prospects for tax reform, infrastructure spending, any sort of stimulus," said Karl Haeling of LBBW.

European stocks, meanwhile, posted slight gains, with some analysts detecting an investment flow from across the Atlantic.

"The latest surfacing of the unpredictable side of Trump adds further weight to renewed investor confidence in European stocks," said Accendo Markets analyst Henry Croft.

Bourses ended a touch higher in Paris and Frankfurt, while surging oil prices helped lift London by 0.6%.

Higher oil prices also helped boost Dow members ExxonMobil and Chevron, but it was not enough to keep the blue-chip index positive. It finished down 0.2%.

Disney was the biggest loser in the blue-chip index, shedding 2.2%on worries about its ESPN sports network, while Boeing fell 2% on news it suspended flight tests of its new 737 plane because of engine problems.

But the Nasdaq ended 0.1% higher, finishing at its fourth-straight record. The S&P 500 also put on 0.1%.

Markets shrug off firing

Analysts said the broader takeaway from the market's reaction was that investors were not ready to throw in the towel on tax cuts and other Trump led measures that have boosted stocks.

The Comey firing "is definitely a distraction, yet it is most definitely not being thought of at this juncture as a tax reform deal killer," said Briefing.com analyst Patrick O'Hare in a note before the market opened, when stock futures pointed to modest losses in the US.

"Those embers continue to burn. Had they been extinguished by the news of Comey's firing, the futures would be down more than they are - a lot more."

Others said the market was focused less on Washington policy and more on corporate earnings, which have generally bested expectations.

"Broadly speaking I do not think this really changes much -- not unless it's the start of a Watergate-like scandal," said ETX Capital analyst Neil Wilson.

"Solid corporate earnings... ought to underpin continued equity strength for time being. I don't think this will wake investors from their slumber yet."

London Capital Group analyst Ipek Ozkardeskaya said, "The abrupt dismissal has been a shock for many, for whom the news has been perceived as tragic for the US democracy.

"But the markets have no hard feelings and they are way more pragmatic," she added.


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donald trump  |  wall street  |  us markets

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