Trump’s deepening political woes hits US stock futures; Treasuries rise

US stocks were poised on Wednesday to start the trading day on a weak note, while Treasuries rose and the dollar fell, amid mounting concern over the controversies that have engulfed the White House.

While Donald Trump’s pro-growth agenda was initially expected to be a boon for risk assets, and a negative for havens, the opposite has played out with increased frequency as the businessman-cum-politician has leapt from one scandal to another.

Late on Tuesday, news hit the wires that James Comey, the former head of the Federal Bureau of Investigation, penned a memo indicating the US president had asked him to halt a probe into Michael Flynn, the former national security adviser.

Democrats seized on the moment, comparing the allegation to the Watergate scandal that sparked the fall of former President Richard Nixon, while several Republicans appeared to distance themselves from Mr Trump.

Haven assets were among the best performers in early trading on Wednesday. The yield on the benchmark 10-year Treasury note, which moves in the opposite direction of the price, was down 0.028 percentage point at 2.298 per cent. Gold advanced 0.7 per cent to $1,245.7 a troy ounce.

Meanwhile, the buck extended its recent descent and continued to trade at levels last seen in the wake of Mr Trump’s election. The dollar index, a gauge of the currency against six trading partners, dipped 0.15 per cent.

“The price action provides further evidence of the ongoing loss of confidence in the Trump administration’s ability to materially boost US growth,” said Lee Hardman, currency analyst at Bank of Tokyo-Mitsubishi UFJ. “The latest political developments in the US are contributing to building investor scepticism,”

The euro has been a particularly big beneficiary of the Trump gloom, along with brightening in the bloc’s economy, gaining 0.18 per cent to $1.1103 on Wednesday, and bringing its gains for the month to 1.9 per cent.

Meanwhile, S&P 500 futures dipped 0.37 per cent to 2,388, signalling the broad index of US equities may fall further from the record peak it set during the trading day on Tuesday.