Stock markets were rattled Wednesday by worries about incoming US president Donald Trump slapping tariffs on imports and the fading prospects for interest rate cuts.
US stocks futures and European shares turned lower after CNN reported that Trump is considering declaring a national economic emergency to provide legal cover to impose tariffs on all imported goods.
鈥楶erhaps more than even during his last term of office, traders will need to pay close attention to everything coming from the new president,鈥� said David Morrison, senior market analyst at Trade Nation.
鈥楢nd, just to prove a point, the dollar has soared while risk assets have tumbled on reports that Trump is 鈥榤ulling a national emergency declaration to allow for new tariff program鈥�.鈥�
Wall Street stocks opened a smidgen lower after all three main indices ended in the red Tuesday, with the Nasdaq and S&P 500 each shedding more than one per cent.
Trump鈥檚 pledges to impose import tariffs, slash taxes and curb immigration when he returns to the White House later this month have also聽raised concerns they will rekindle inflation.
Data released Tuesday pointed to price pressures and a relatively robust US labour market, denting hopes of several more cuts to interest rates in the world鈥檚 biggest economy.
Yields on US government debt rose further on Wednesday.
鈥楾he higher market rates are creating a headwind for a stock market many would describe at least as having a full valuation,鈥� said Briefing.com analyst Patrick O鈥橦are said.
Data released Wednesday showed the US private sector added fewer jobs than anticipated in December, payroll firm ADP said, with hiring and wage increases both cooling.
Meanwhile, first-time claims for jobless benefits dipped last week, while those for continuing claims rose.
Focus now turns to Friday鈥檚 release of the key non-farm payrolls report, which will provide a fresh snapshot of the US economy.
The Fed has already lowered its outlook for rate cuts to two reductions this year, down from the four forecast in September before Trump鈥檚 election victory.
鈥楤ut speculation is brewing that this could be reduced to just one if price pressures persist,鈥� said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
In Europe, German industrial orders fell more than five per cent in November, official data showed Wednesday, in the latest sign of headwinds facing the continent鈥檚 largest economy.
On the corporate front, shares in British energy giant Shell slid 1.8 per cent on a weak trading update ahead of its full year results, capping gains on London鈥檚 benchmark FTSE 100 index.
Asian stock markets closed mostly down Wednesday.
