Asian equity markets were broadly lower, extending a selloff in the U.S. overnight, as doubts increased that the Trump administration would be able to deliver on its policy goals due to mounting political problems.
The latest political developments have put President Donald Trump's administration on the defensive and investors world-wide are more worried about his ability to push through proposals on tax cuts, deregulation and infrastructure spending.
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Concerns among global investors got worse on Tuesday when reports emerged that Mr. Trump asked James Comey, who he subsequently fired as the head of the Federal Bureau of Administration, to back off the investigation of former national security adviser Michael Flynn. The White House has denied the account.
The news that former FBI Director Robert Mueller will serve as special counsel to oversee a federal investigation into alleged Russian interference in the 2016 presidential election did little to calm market jitters.
Japan's Nikkei Stock Average was recently down 1.4%. A global flight to haven assets boosted the value of the yen, weighing on the country's exporters.
The U.S. dollar dropped 2% overnight against the yen, registering its largest one-day percentage decline since July 2016. In Asian trade, the dollar recovered slightly Thursday to trade up 0.2% at Yen111.01. Among key exporter stocks, Mitsubishi Motors was down 2.4%, while Mazda Motor fell 2.3% and Honda Motor declined 1.8%.
"The aggressive risk-off reverberations are taking the market by surprise right now," said Stephen Innes, head of trading for Asia at forex broker Oanda.
Elsewhere, Australia's S&P/ASX 200 was down 1.2%, while Korea's Kospi declined 0.5% and Singapore's Straits Times Index also lost 0.5%.
"Markets have begun to price in a substantial delay in enacting Trump's signature tax reforms legislation," said Zhu Huani, an economist at Mizuho Bank in Singapore.
Meanwhile, stocks in China were more resilient, as expectations for more infrastructure spending--particularly focused on a new economic region near Beijing--boosted construction and property stocks.
The Shanghai Composite Index and Shenzhen Composite Index were both down 0.3%, while Hong Kong's Hang Seng Index was 0.2% lower.
Japanese life insurers, which are large holders of U.S. government bonds, were particularly hit by overnight declines in 10-year U.S. Treasury yields, which dropped by the most in a day since late June 2016. Dai-ichi Life was down 4.4% and T&D Holdings was 3.3% lower.
In Australia, the nation's currency rose to its highest level against the U.S. dollar since May 4 after an unexpected fall in Australia's unemployment rate in April.
The Aussie dollar rose to US$0.7452 from US$0.7416 before the release of the jobs data.
David Winning and John Wu contributed to this article.
Write to Kenan Machado at email@example.com
(END) Dow Jones Newswires
May 17, 2017 23:50 ET (03:50 GMT)