US stocks fall, bonds rise as Trump in focus

Bloomberg

US stocks fell the most since the presidential election, while Treasuries advanced with gold as Donald Trump’s order on immigration raised concern that he may follow through with isolationist policies touted on the campaign trail, overshadowing a pro-growth agenda.
The Dow Jones Industrial Average tumbled more than 200 points, retreating below 20,000 after closing at records last week. The S&P 500 Index slid the most since Nov. 1, as Trump’s ban drew a rebuke from some Republican lawmakers, raising the specter of a rift between the executive and legislative branches. The dollar fell versus the yen and precious metals advanced as investors favored haven assets. The yield on 10-year Treasury notes slipped two basis points. German price growth rose at the fastest pace in 3 1/2 years.
The rout in riskier assets on Monday represented the biggest market rebuke yet to the new administration’s policy preferences after US stocks had staged one of the best-ever post-election rallies on speculation Trump would pursue pro-growth policies. Instead, the focus in the administration’s early days has been on trade and immigration, with little clarity on tax and business reform. While Trump on Monday promised to do a “big number” on the financial regulations in Dodd-Frank, bank shares plunged the most since Jan. 17.
“Global risk sentiment appears to have been jolted somewhat by the weekend focus on President Trump’s moves on immigration,” according to Scotiabank strategists led by Shaun Osborne in Toronto. “The focus on US political developments may restrain for now the underlying bid” for US assets.
Here’s what’s coming up this week:
The Federal Reserve holds a policy meeting on Feb. 1 and the Bank of Japan convenes this week. Neither is expected to change lending rates, though the Fed’s statement will be parsed for any reading on Trump’s impact on the world’s largest economy. Apple Inc., Facebook Inc. and Amazon.com Inc. are among the major US companies due to report results. Of the 219 S&P 500 names to report so far, 73 percent have topped profit estimates. Japan will see earnings from heavy hitters including Sony Corp. and Honda Motor Co. The first US jobs report of the year is due on Feb. 3., while China manufacturing and services industry data are scheduled for Feb. 1.

Bonds
US Treasury 10-year yields fell to 2.47 percent as Microsoft Corp. started selling new bonds with maturities ranging from three to 40 years. European bonds fell after data showing Germany’s consumer price index accelerated to 1.9 percent from a year ago, the highest rate since July 2013. The yield on 10-year French bonds climbed three basis points to 1.1 percent. Portuguese bonds due in a decade yielded six basis points more at 4.1 percent.

Stocks
The Stoxx Europe 600 Index fell 1.1 percent at 11:08 a.m. in New York. The S&P 500 Index fell 1 percent, while the Dow Jones Industrial Average lost 198.20 points to 19,895.581. Vodafone Group Plc led a gauge of telecommunications firms higher as it rose 2 percent after saying it’s in talks to merge its Indian unit with Idea Cellular Ltd. in a deal that would create the country’s largest cellular carrier. The Bloomberg Dollar Spot Index was little changed after erasing losses of as much as 0.4 percent. The pound weakened 0.2 percent, extending a two-day decline. The yen climbed 0.5 percent to 114.51 per dollar. The South African rand fell 0.7 percent against amid speculation President Jacob Zuma is planning a cabinet reshuffle.
West Texas Intermediate crude was little changed at $53.14 a barrel. Gold rose 0.1 percent to $1,192.13, reversing its first weekly loss in a month. Rubber futures rallied 6.1 percent to 335.1 yen a kilogram, the highest since 2011 on concerns about tight supply of the commodity from Thailand.