Barcelona attack adds to global worries
Markets slide as fears grow over Trump’s ‘isolation’
In the opening minutes of trade it was down 0.65% at 7,340.21.
Asian markets slid overnight. Japan’s Nikkei fell 1% on global jitters and a stronger yen, and is on course to lose 1.3% for the week. Hong Kong’s Hang Seng retreated 1.1%.
Confidence was shaken further after a van mowed through crowds of tourists in Barcelona on Thursday, killing at least 13 people and injuring more than 100 in an attack by Islamic terrorists.
Police later killed five attackers in Cambrils, a town south of Barcelona.
The Dow Jones and the S&P 500 suffered their worst one-day falls in three months.
The selloff was fuelled by mounting concerns about President Trump’s ability to push through his economic agenda and fresh fears that his closest economic advisers at the White House will abandon him like the nation’s top business executives did this week.
The stock market has shown tremendous resilience in recent weeks. It first shrugged off the military sabre-rattling between the US and North Korea.
But on Wednesday Mr Trump lost the backing of many of the nation’s most powerful CEOs after failing to denounce unequivocally the hate groups protesting in Virginia.
Investors began to take notice when rumours Mr Trump’s economic adviser Gary Cohn was losing confidence. This fanned fresh fears of more resignations among those regarded as critical to the success of his economic agenda.
A statement from the White House that Mr Cohn intends to remain in his position calmed markets only briefly before selling resumed.
The Dow fell 274.14 points, or 1.24%, to 21,750.73. It was the index’s biggest one-day point and percentage decline since 17 May, trimming its year-to-date gain to 10.1% and leaving it down 1.7% from its 7 August record high of 22,118.42.
Chris Rupkey, chief financial economist at MUFG, said: “The reason for the selloff seems to be the cumulative news over the last two days where it looks like the president is being deserted by the cream of the cream of the business establishment.
“The rumour of Gary Cohn leaving the administration shows you how worried the market is about the Trump presidency imploding.”
Other analysts say the fall was due as the market is overvalued and investors are taking note of a spate of weak earnings reports and forward guidance from some big companies like Wal-Mart Stores, the nation’s biggest retailer.
More positively, US stock markets are still being underpinned by an improving economy.