Key Wall Street markets saw their worst falls since Donald Trump’s election victory yesterday.
As investors sounded a note of caution over whether the President’s tax cut plan would materialise, the record highs the US markets have seen recently tailed off.
The Dow Jones closed 1.14 per cent down, the Nasdaq dropped 1.83 per cent, and the S&P 500 lost 1.24 per cent – its biggest one-day fall since election day.
Volatility indexes rose, as did smaller company indexes, though major banking names such as Bank of American and Goldman Sachs took some of the worst hits.
Interactive Investor head of investment Rebecca O’Keeffe says: “Financials and commodities have been the winners since the US election and these are the sectors under most pressure now as concerns rise that the Trump trade has gone too far, too fast, without seeing the relevant policy changes to support market expectations.
“It is a measure of how calm markets have been that the 1 per cent+ fall seen in the US yesterday was the biggest sell-off since Trump was elected. High expectations and low volatility has seen money pouring into markets, providing the foundations for valuations.
“However, the key questions are: how sticky this money is; whether the market has become overly complacent; what happens if investor confidence falls; or is this simply a buying opportunity?”
The FTSE 100 started the day with a smaller fall of 0.6 per cent to 7,332.