Asia-Pacific stocks fell Wednesday, with investors spooked by news that Gary Cohn would resign as President Donald Trump’s top economic adviser after he lost a fight over tariffs.
There was a lot of confusion in the morning session, said Kay Van-Petersen, global macro strategist at Saxo Bank. He expected further volatility once European traders arrived at their desks.
“I’ve gone from being a little bit relaxed about the trade-war thing to being quite a lot more nervous,” he added. “People are not giving it as much weight as they should be…I don’t think people are really thinking this through.”
Highlighting the back-and-forth in markets, Japan’s Nikkei Stock Average NIK, -0.77% fell 0.8% after turning positive during the session. Commodities-related stocks, banks and auto makers sagged.
The commodities-heavy S&P/ASX 200 in Australia XJO, -1.01% closed down 1% with oil futures CLJ8, -0.73% also under pressure.
S&P 500 futures ESH8, -0.99% were down 1.4% while the ICE Dollar Index DXY, +0.09% eased 0.1%.
Read: Dow set for 300-point drop after Cohn’s exit
Cohn’s resignation is bad news for markets, said Robert Gillam, chief executive at McKinley Capital. “Gary Cohn is well-regarded in the investment community and we are likely to see some short-term negative sentiment” from his departure, he added.
But Cohn’s resignation might help to “strike a balance” between trade hawks and doves, said Jane Fu, sales trader at CMC Markets. “Trump may want to appoint someone more hawkish, but that will not eliminate the opposition within the White House,” she said.
Cohn was one of several White House voices arguing against the planned tariffs on imports of steel and aluminum. But the trade measures face opposition, even from Trump’s fellow Republicans.
As Asian trading commenced, a message on Trump’s official Twitter account said that he would make a decision “soon” on Cohn’s replacement.
Safe-haven assets rose Wednesday on the uncertainty in U.S. policy, with the 10-year Treasury yield TMUBMUSD10Y, -1.33% falling to 2.86% from 2.88% in late New York trading Tuesday. The yen USDJPY, -0.47% was up 0.4% versus the U.S. dollar, euro and pound.
Shanghai’s Composite SHCOMP, -0.55% fell 0.6%. The market had been higher during the session, with a jump in banks on word of a looming cut in reserves needed to cover bad loans.
In South Korea, the Kospi SEU, -0.40% fell 0.4% although shares in tech giant Samsung Electronics 005930, +3.40% rebounded by 3.4%.
Still, investor sentiment in South Korea improved on news that North Korea was open to talking about giving up its nuclear weapons, despite U.S. skepticism. That was offset by trade worries, said Fu.
“If this thing happened on a normal day, you could see a bigger impact, but it’s happened in the middle of this trade war saga,” she said.