European stocks looked set for their biggest drop since the middle of August on Wednesday, as jitters over an impeachment probe into US president Donald Trump roiled global markets.
The pan-European STOXX 600 index (^STOXX), which tracks 600 of Europe’s biggest stocks, is nevertheless down by more than 1% — meaning that it’s heading for its worst day in six weeks.
The biggest loser was Electricite de France (EDF.PA), which announced on Wednesday that it was raising the projected costs of two reactors it is building in the UK.
But markets were primarily contending with the impact of the impeachment probe launched by the Democrats in Washington overnight, and Trump’s increasingly strident rhetoric about the US–China trade war.
Stocks in Asia also fell across the board, with most major indices also falling by more than 1%.
The FTSE 100 was cushioned by a drop in the value of sterling, which erased all of the gains it made in the wake of Tuesday’s UK Supreme Court decision, which found that prime minister Boris Johnson unlawfully suspended parliament.
Sterling fell by around 0.8% against the dollar to just under $1.24 (GBPUSD=X), and was dented similarly against the euro.
Investors are “increasingly anxious due to Trump’s comments which criticised China’s unfair trade practices,” said Naeem Aslam, chief market analyst at ThinkMarkets, in a note on Wednesday.
“Moreover, investors are also worried about the ongoing drama over in Washington which could possibly end up in Trump impeachment,” he said.
Nancy Pelosi, the speaker of the US House of Representatives, late on Tuesday announced that her party would launch a formal impeachment enquiry, largely prompted by Trump’s dealings with Ukraine.
Trump allegedly goaded the president of Ukraine on a phone call to open a corruption investigation into former US vice-president Joe Biden.
The US president, while insisting that he acted appropriately, has confirmed aspects of the allegations, which came to light as part of a a whistle-blower complaint.
The call came days after Trump reportedly told officials to withhold more than $391m in aid to Ukraine.