* Push for Trump impeachment increases political risk
* European stocks tumble, U.S. futures point lower
* Oil falls on worries about global economy
* Brexit chaos deepens, pound drops 1%: https://tmsnrt.rs/2l2BqTR
By Karin Strohecker
LONDON, Sept 25 (Reuters) - World stocks fell to a two-week
low and risk assets withered on Wednesday after U.S. lawmakers
called for an impeachment inquiry into President Donald Trump,
raising the prospects of prolonged political uncertainty amid a
fresh rise in trade tensions.
Adding to geopolitical tensions was heightened uncertainty
over Britain's departure from the European Union after the
Supreme Court ruled Prime Minister Boris Johnson had unlawfully
suspended parliament. The pound fell about 1% in its biggest
daily decline since the end of July.
The move by Democrats in the U.S. House of Representatives
to impeach Trump has exacerbated market anxieties over global
recession risks and the U.S.-China trade dispute. Trump
delivered rebuked China for its trade practices in a speech on
Tuesday. MSCI's global stock index .MIWD00000PUS dropped 0.4% in a
fourth straight day in the red - the longest losing streak since
a rout at the end of July.
The pan-European STOXX 600 .SXPP dropped 1.4%, led by
technology stocks .SX8P . .EU France's CAC .FCHI tumbled
1.5%; export-reliant Germany .GDAXI fell 1.2%.
"It is hard to imagine how long can the truce with China
remain on trade and that is adding to the general cautious
environment for stocks," said Neil Mellor at BNY Mellon in
London. "As soon as markets start worrying about trade, they
look at central banks for help, but there is increasing pushback
from them, too."
The downturn in Europe followed declines in Asia. Tokyo's
Nikkei .N225 suffered its largest loss in three weeks. China
.SSEC and Hong Kong .HIS dropped 1% or more.
China's offshore yuan weakened, many other emerging-market
currencies weakened and oil futures extended their declines.
The downturn looked to continue in the United States, with
U.S. stock futures ESc1 indicating a 0.2% decline at open.
The impeachment inquiry and disappointing U.S. economic data
had knocked Wall Street on Tuesday, sending the S&P 500 .SPX
0.84% lower, its biggest daily decline in a month.
The U.S. House of Representatives will begin a formal
impeachment inquiry over whether Trump sought help from the
Ukraine to smear former Vice President Joe Biden, a front-runner
for the 2020 Democratic presidential nomination. It is unlikely that the inquiry will lead to Trump's removal
from office. Even if the Democratic-controlled House voted to
impeach Trump, he would then be tried in the Senate, where
Republicans hold the majority and are unlikely to convict him.
"Despite the drama this process will inject into the rest of
the President's first term, there is little justification for
altering asset allocation now, unless one thinks that this issue
is the decisive one that tips the U.S. economy into sub-trend
growth and/or a profits recession," said JPMorgan's head of
cross-asset fundamental strategy, John Normand.
PRETTY REMARKABLE
Markets have already been roiled by political disquiet in
Hong Kong from Britain to Italy and the Middle East, with the
latest developments prompting investors to ditch riskier assets
and flock back to safe havens.
The dollar index .DXY , measuring the U.S. currency against
a basket of six other major currencies, nudged 0.3% higher. The
safe-haven Swiss franc edged up 0.2% against the euro to 1.0845
francs EURCHF=EBS .
Sterling dropped 1% to $1.2377 GBP= , more than reversing
its gains from Tuesday when Britain's Supreme Court ruled
Johnson had unlawfully suspended parliament. Johnson vowed
Britain would leave the EU by an Oct. 31 deadline come what may,
but he now faces reinvigorated opposition to his plans.
Britain's FTSE index .FTSE dropped 0.8%. "Predicting the ultimate outcome of Brexit remains
difficult," said Mark Haefele, chief investment officer at UBS
global wealth management. "As a result, the longer-term
risk-return outlook for UK equities looks uncertain. We still
advise being nimble on sterling."
The move to safe havens also saw euro zone government bond
yields slip lower. Yields on sovereign debt across the bloc
plunged this week, with many at their lowest since Sept. 12,
when the European Central Bank announced a new wave of stimulus
measures to boost economic growth and inflation. DE10YT=RR
FR10YT=RR BE10YT=RR GVD/EUR
The yield on benchmark 10-year Treasury notes US10YT=RR
stood at 1.6387%, the two-year yield US2YT=RR at 1.6076%.
U.S. crude oil CLc1 dipped to $56.19 a barrel. Brent crude
LCOc1 dropped to $61.7 per barrel - both down nearly 2%. O/R
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Asian countries top export items to China https://tmsnrt.rs/2NyAIcQ
GBP volatility https://tmsnrt.rs/2l2BqTR
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