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GLOBAL MARKETS-Stocks rattled as Trump impeachment bid raises new risks

Published 25/09/2019, 03:37
© Reuters.  GLOBAL MARKETS-Stocks rattled as Trump impeachment bid raises new risks
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* Asian stock markets: https://tmsnrt.rs/2zpUAr4

* Push for Trump impeachment increases political risk

* Asian stocks track Wall Street lower

* Oil falls on worries about global economy

By Stanley White

TOKYO, Sept 25 (Reuters) - Asian stocks fell on Wednesday

after U.S. lawmakers called for an impeachment inquiry into

President Donald Trump, increasing the prospects of prolonged

political uncertainty in the world's largest economy.

The dramatic move by House of Representatives Democrats

compounded investors' anxieties with confidence already shaken

by new worries about U.S.-China trade negotiations.

MSCI's broadest index of Asia-Pacific shares outside Japan

.MIAPJ0000PUS was down 0.82%, Japan's Nikkei .N225 fell

0.63%, while Australian shares .AXJO fell 0.60%.

Chinese shares slumped and oil futures extended declines

after Trump harshly criticised Beijing's trade practices in a

speech at the United Nations, damping hopes for a resolution to

the U.S.-China trade war.

The dollar nursed losses against most major currencies as

the inquiry sets the stage for a fierce battle between Democrats

and Trump's Republican Party over whether the president sought

foreign influence to smear a political rival.

"The impeachment probe has put a dent in Asian shares," said

Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai

Asset Management Co in Tokyo.

"Chinese shares were already exposed to downside risks.

Trump's comments likely increased those risks. There are worries

about U.S. consumer sentiment. There are also concerns that

China's economic slowdown hasn't stopped."

U.S. stock futures, ESc1 , rose 0.06% in Asia on Wednesday,

but the mild gains are unlikely to improve sentiment for Asian

shares.

The push for an impeachment inquiry and disappointing U.S.

economic data weighed on Wall Street on Tuesday, pushing the S&P

500 .SPX 0.84% lower, its biggest daily decline in a month.

The U.S. House of Representatives will launch a formal

impeachment inquiry over whether Trump sought help from the

Ukraine to smear former Vice President Joe Biden, a front-runner

for the 2020 Democratic presidential nomination. Trump has

denied the claims. It is unlikely that the impeachment inquiry would lead to

Trump's removal from office. Even if the Democratic-controlled

House voted to impeach Trump, the Republican-majority Senate

would have to take the next step of removing him from office

after a trial. However, the development injects fresh uncertainty into

financial markets, which have already been heavily jostled by

emerging global political risks in recent years.

"If an impeachment enquiry looks like ending his re-election

chances in 2020, he may throw caution to the wind and harden his

attitude to a China trade deal, increasing the chances of a

global recession next year," said Jeffrey Halley, Senior Market

Analyst, Asia Pacific, OANDA.

The dollar index .DXY measuring the greenback against a

basket of six major currencies was little changed after falling

0.3% on Tuesday.

Chinese shares .CSI300 fell 0.79% while shares in Hong

Kong .HSI skidded by 1.23%

Trump said on Tuesday Beijing had failed to keep promises it

made when China joined the World Trade Organization in 2001 and

was engaging in predatory practices that had cost millions of

jobs in the United States and other countries. U.S. crude CLc1 dipped 0.75% to $56.86 a barrel. Brent

crude LCOc1 fell 0.86% to $62.55 per barrel.

The U.S.-China trade war, which has dragged on for more than

a year, has added pressure on China's already slowing economy

and has increased the risk of recession in other countries.

Slower global growth would hurt demand for energy and other

commodities.

Sterling traded at $1.2473 GBP=D3 , down 0.2%, having

trimmed some of its overnight gains made following the UK court

ruling.

In response to the UK Supreme Court's decision, Johnson said

he disagreed and vowed that Britain would leave the EU by Oct.

31 deadline, come what may.

Calls for Johnson's resignation could grow, which would cast

even more uncertainty over how the UK would complete its divorce

from the EU. The yield on benchmark 10-year Treasury notes US10YT=RR

rose to 1.6352%, while the two-year yield US2YT=RR rose to

1.6096%.

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