Asian stocks rattled as move to impeach Trump raises new risks

(Reuters) – Asian stocks fell the most in three weeks 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 Democrats in the House of Representatives compounded investors’ anxieties with confidence already shaken by U.S.-China trade tensions and global recession risks.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.86%, the biggest decline since Sept. 3, while Tokyo’s Nikkei slipped 0.39% for its largest loss in three weeks. Australian shares fell 0.54%.

The downturn in Asia extended to Europe, with Euro Stoxx 50 futures off 0.20%, those for Germany’s DAX down 0.30% and FTSE futures off 0.26%.

Chinese shares slumped and the offshore yuan fell, while oil futures extended declines after Trump harshly criticized Beijing’s trade practices in a speech at the United Nations, damping hopes for a resolution to the U.S.-China trade war.

“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.”

Sterling fell against the dollar, giving up some of its overnight gains, as persistent uncertainty over how Britain will complete its divorce from the European Union dogged the pound.

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