Markets stumble after US President Donald Trump fires FBI director James Comey

The US dollar remained under pressure, having tumbled to a six-month euro low after Trump ousted Comey late on Tuesday.

Published: 10th May 2017 04:02 PM  |   Last Updated: 10th May 2017 04:02 PM   |  A+A-

US President Donald Trump (File | AP)

By AFP

LONDON: World stock markets and the dollar wobbled on Wednesday, shaken by overnight news that US President Donald Trump has fired FBI director James Comey.

In late morning European equity trade, Paris dipped 0.1 percent in value and Frankfurt flatlined, while London clawed its way 0.2 percent higher.

The US dollar remained under pressure, having tumbled to a six-month euro low after Trump ousted Comey late on Tuesday.

Asian stock markets mostly rose as South Korea's new president Moon Jae-In was sworn in, one day after his landslide election victory.

Later Wednesday, all eyes will be on Wall Street's reopening to gauge US reaction to Trump's bombshell announcement, which echoed his "You're fired!" catchphrase on US reality TV show The Apprentice.

"Comey's firing is taking the shine off equities with European markets eyeing a potentially soft session in the US later," ETX Capital analyst Neil Wilson told AFP.

Republican Trump on Tuesday ousted the man who headed a wide-ranging investigation into whether his aides colluded with Russia to sway last year's US election.

 Watergate comparison

In a shock move that drew comparisons to the Watergate scandal that brought down Richard Nixon, Trump told Comey the FBI needed new leadership and he was being "terminated" with immediate effect.

"The dollar sold off on the news and stocks are softer this morning, but broadly speaking I do not think this really changes much -- not unless it’s the start of a Watergate-like scandal," added Wilson.

"Plenty of people think Trump will be impeached and this hardly helps.

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

Trump cited Comey's mishandling of the probe into Hillary Clinton's emails, which the Democrat has blamed for trashing her chances of becoming president.

However, London Capital Group analyst Ipek Ozkardeskaya argued that some investors were taking a "pragmatic" approach to the Comey news -- which could breathe new life into Trump's pro-business policies, like tax cuts.

"The abrupt dismissal has been a shock for many, for whom news has been perceived as tragic for the US democracy," Ozkardeskaya told AFP.

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

"So, on the flip side of the coin, the fact that Trump shows teeth and gradually gathers power by his side means that he will also be gradually able to bring his reforms into life.

"Such abrupt actions at the heart of the government could soften and gradually eliminate some Republicans' opposition against Trump's reforms... and that is positive for stock prices, provided that businesses benefit from major tax cuts," said Ozkardeskaya.

Moon sweeps to power

Elsewhere, South Korea's won currency advanced as Moon's election win helped investors look past fresh warnings of a nuclear test from the North. Moon also declared his willingness to visit Pyongyang.

Moon swept to power on Monday in an unprecedented election that was called after his predecessor Park Geun-Hye was impeached over a corruption scandal.

The US dollar, which has surged this week on expectations the Federal Reserve will lift US interest rates next month, struggled to bounce back Wednesday due to North Korea jitters -- and news of Comey's firing.

"The sacking of the FBI director highlights Trump's unpredictable policy but the impact on the dollar was muted as several Fed officials rubber stamped market expectations of a June Fed tightening," noted NFS Macro analyst Nick Stamenkovic.

Key figures around 1000 GMT

London - FTSE 100: UP 0.2 percent at 7,358.53 points

Frankfurt - DAX 30: FLAT at 12,751.05

Paris - CAC 40: DOWN 0.1 percent at 5,394.90

EURO STOXX 50: DOWN  0.1 percent at 3,644.77

Tokyo - Nikkei 225: UP 0.3 percent at 19,900.09 (close)

Hong Kong - Hang Seng: UP 0.5 percent at 25,015.42 (close)

Shanghai - Composite: DOWN 0.9 percent at 3,052.79 (close)

New York - Dow: DOWN 0.2 percent at 20,975.78 (close)

Euro/dollar: DOWN at $1.0871 from $1.0874 at 2100 GMT

Pound/dollar: UP at $1.2948 from $1.2935 

Dollar/yen: DOWN at 113.94 yen from 114.04 yen

Oil - Brent North Sea: UP 48 cents at $49.21 per barrel

Oil - West Texas Intermediate: UP 43 cents at $46.31

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