It was definitely the most interesting day in the market since the US President Donald J. Trump was elected. Volatility increased significantly, fears index soared, stocks tumbled, USD tanked, while safe haven assets rallied.
What’s The Catalyst?
A few days ago, NY Times published an article which could be considered as the most significant scandal in the US history, of course, if the information is confirmed.
NY Times noted that the US President asked the former FBI chief to stop the investigation of the former national security advisor Michael T. Flynn, who had suspicious ties with Russia, leading him to resign few days after he was appointed.
If the congress is able to confirm these facts, this might be the beginning of the end for Donald Trump presidency according to many political experts.
Why The Markets Tumbled?
As we all know, the markets are sensitive to any significant event, whether it is political or economic, whether it is a rumor or an actual news. In both cases, investors and traders always need an excuse to take action.
As expected, the White House denied all these claims, and the former FBI chief did not confirm the rumors either. This would keep the market uncertain, especially knowing the fact that there is no denial from the former FBI chief. Since there is no denial, this actually might be true, leading investors to act against stocks and flee to safe haven assets.
Moreover, If the claims are true, this would lead to significant complications for Donald Trump and might lead him to resign at some point. If so, this is nothing but a negative factor for the US.
What’s Next?
The Congress has requested the former FBI Chief to testify in public. There is no date for such testimony yet. However, the Congress asked the FBI to provide them with all the notes, memos, recordings and any documents that are related to this incident. The Congress has a deadline of 22 May to get all the documents.
In return, the testimony is likely to take place on that date, after the Congress can review them before asking the questions to the FBI chief.
Full article: https://www.orbex.com/blog/2017/05/markets-tumbles-by-trump/