Mettis Global News
Mettis Global News
Mettis Global News
Mettis Global News

Trending :

Political Turmoil in the US sends Stocks Plummeting down

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp

Markets on Wednesday experienced their lowest drop since September last year. Ever since Trump’s inauguration, US markets’ had continued to grow despite some experts calling Trump Presidency an upset. The stocks grew amidst Trump’s campaign promises of America First, production increases and tax cuts. The markets were highly optimistic about the Trump’s policies pitched at making America great again.

But the continuous stream of bad news and erratic behavior form White House has finally started to show on stock markets. On Wednesday, after the ruckus of FBI-Trump fiasco, markets went in a steep decline led by NASDAQ Composite which fell 2.57%. S&P 500 Index slid 1.8%, Dow Jones Industrial fell by 1.8%, and Russell 2000 index fell by 2.8%. Trump’s unpredictability and constant deviation from presidential norms in his decision making has made investors rethink their optimism.

The CBOE Volatility index, the most widely followed barometer of expected near-term stock market volatility, ended above the 15 level in its highest close since April 13.

Bank stocks, which outperformed in the post-election rally, were the worst hit on Wednesday. The S&P 500 financial sector tumbled 3 percent, with shares of Bank of America and Morgan Stanley falling roughly 6 per cent.

USD was also affected by the news, ICE US Dollar Index, which measures the dollar against a basket of six currencies, fell 0.6 per cent and was on track for its lowest close since before the election.

Bloomberg reports that world’s 500 richest people lost a total of $35 billion on Wednesday, with Facebook owner Mark Zuckerberg was hit hardest after losing around $2 billion. Bill Gates, world’s richest person with a net worth of $86.8 billion lost up to $1billion dollars as the news of Trump’s document leaks to Russia surfaced on the media.

With some political analysts comparing the Nixon administration to that of Trump, the logical end is impeachment of the President. What follows form the FBI investigation is yet to be seen, though the constant barrage of bad news has had investors worried throughout the world?

In March, stocks pulled back as House Republicans stumbled in their efforts to pass a healthcare bill, with investors saying it added to doubts that Mr. Trump would be able to push through tax cuts.

Although, analysts are certain that political drama may have a short-term impact on volatility of market but in the long term it will not make much of a difference to the stock market. The reason for this has been the US stock markets’ reliance on earnings, and earnings come from growth and these poltical unfolding will not have that big an impact on growth.

The Asian Markets also tumbled owing to the rising uncertainty in the political system of US. With Pakistan’s inclusion to MSCI-EM, the influence of US Stock Market performance will multiply in the coming few months.

Posted on: 2017-05-18T11:43:00+05:00