Donald Trump’s spat with Democrats over Mexico border wall funding sinks Wall Street



December 12, 2018 09:16:19

US President Donald Trump’s latest threats to shut down the Government led to a surge in market volatility overnight.

Markets at 8:30am (AEDT):

  • ASX SPI futures +0.3pc at 5,608, ASX 200 (Tuesday’s close) +0.4pc at 5,576
  • AUD: 72.01 US cents, 57.65 British pence, 63.59 Euro cents, 81.66 Japanese yen, $NZ1.05
  • US: Dow Jones -0.2pc at 24,370, S&P 500 flat at 2,637, Nasdaq +0.2pc at 7,032
  • Europe: FTSE 100 +1.3pc at 6,807, DAX +1.5pc at 10,781, CAC +1.4pc at 4,806, Euro Stoxx 50 +1.6pc at 3,066
  • Commodities: Brent crude +1.2pc at $US60.70/barrel, spot gold -0.1pc at $US1,243.08/ounce, iron ore -0.2pc at $US65.97/tonne

In a remarkable public spat, the Republican President bickered with two senior Democrats — Senate Democratic leader Chuck Schumer and House Democratic leader Nancy Pelosi.

Their heated argument was over funding for the wall he had promised to build on the southern border with Mexico.

“If we don’t get what we want, one way or the other — whether it’s through you, through a military, through anything you want to call — I will shut down the Government,” Mr Trump said in front of reporters at the White House.

The industrial-skewed Dow Jones index alternated between gains and losses — rising by as much as 368 points prior to Mr Trump arguing with the Democrats, and experiencing a 202-point drop afterwards.

The Dow ultimately finished its trading day 53 points lower, down 0.2 per cent to 24,370.

Meanwhile, the other main Wall Street indices fell into the red, after wiping out their early gains.

The S&P 500 closed practically flat, losing 0.04 per cent to 2,637.

The tech-heavy Nasdaq index managed to gain 0.2 per cent to 7,032.

Oval Office argument overshadows trade

The on-air argument between Mr Trump and the top Democrats overshadowed positive developments in the US-China trade war.

Wall Street’s initial optimism was due to reports that China is moving to cut import tariffs on American-made cars — from the current rate of 40 per cent, down to 15 per cent.

Furthermore, Chinese Vice-Premier Liu He had discussions about the next stage of trade talks with US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer, according to the Wall Street Journal.

Mr Trump even tweeted that there had been “Very productive conversations going on with China! Watch for some important announcements!”

In contrast, European markets closed sharply higher, with major bourses in London (+1.3pc), Frankfurt (+1.5pc) and Paris (+1.4pc) enjoying strong gains.

That was despite ongoing uncertainty after British Prime Minister Theresa May postponed a key parliamentary vote on her Brexit deal yesterday.

German Chancellor Angela Merkel has since ruled out further Brexit negotiations, but said efforts were being made to give Britain “reassurances”.

Aussie dollar rises against sterling

Meanwhile, the Australian share market is set to open slightly higher. ASX futures are pointing to a gain of around 0.3 per cent in early trade.

The Australian dollar lifted back to 72 US cents at 8:10am (AEDT).

It performed especially well against European currencies, jumping to 57.68 British pence and 63.62 euro cents.

The sterling fell to a 20-month low against the US greenback on reports that momentum is building for a no-confidence vote against Ms May’s leadership.








First posted

December 12, 2018 07:52:52

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