European stock markets fell sharply on Wednesday, knocked by Wall Street suffering its worst day of the year on Tuesday, as doubts around Donald Trump’s economic policies drove investors out of some of the most popular trades of the last few months.
The Dow Jones Industrial Average and the S&P 500 both fell over 1 per cent on Tuesday, which marked their worst one-day performance since Mr Trump’s US presidential election victory in November, according to Reuters.
Asian shares posted their biggest single-day decline in two weeks on Wednesday and major indices across Europe kicked off the session lower too.
London’s FTSE 100 was down more than half a percent in morning trading.
Chris Beauchamp, an analyst at IG, said late afternoon on Tuesday that stocks “aren’t exactly in freefall” but that “the quick turn lower” had “certainly spooked an investment community that had become accustomed, however reluctantly, to a steady, attritional grind higher”.
The fall in equities also coincided with the release of an investor survey by Bank of America Merrill Lynch, which showed that investors now see global stocks as being at their most expensive in 17 years.
In the US on Tuesday, bank stocks were particularly hit by selling and the S&P’s sub-sector of financials fell around 2.9 per cent, which was its biggest fall in a single day since June last year.
In the aftermath of Mr Trump’s November election victory stock markets, especially in the US had surged, spurred by the New York businessman’s campaign promises of tax and regulatory roll backs and higher infrastructure spending.
Bank stocks enjoyed especially sharp rises and the dollar rallied hard too, but in the last few weeks moves have become more muted.
Investors appear to be looking for proof that the rallies will be justified by hard policy action from the President.
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