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US stocks fall further as Mnuchin cancels Saudi visit

US stocks fall further as Mnuchin cancels Saudi visit

NEW YORK: Losses on Wall Street deepened at midday Thursday after Treasury Secretary Steven Mnuchin announced he would skip an investment conference in Saudi Arabia following the suspected murder of journalist Jamal Khashoggi.

The Dow Jones Industrial Average fell to 25,356.17, down 1.4 percent, shortly after 1615 GMT.

The broad-based S&P 500 also dropped 1.4 percent to 2,770.57, while the tech-rich Nasdaq Composite Index slid 1.9 percent to 7,499.67.

Mnuchin announced on Twitter that he would not go to the Future Investment Initiative summit, the most concrete sign of distancing by the Trump administration of Saudi Arabia since Khashoggi’s disappearance intensified scrutiny of the big oil exporter.

Mnuchin’s withdrawal “raises worry that the administration is being pushed to take a harder line against Saudi Arabia over the Khashoggi murder and there could be retaliation,” said Karl Haeling of LBBW.

Responses from Saudi Arabia could include selling US Treasuries, or punishing US companies seeking business in the kingdom, Haeling said.

Most analysts don’t think Saudi Arabia would cut off oil supplies. Oil prices were off modestly at midday.

Haeling said the pullback in the stock market also coincided with rising tensions between Brussels and Rome and reports that European Central Bank Chief Mario Draghi calling on countries to honor EU budget limits.

Jack Ablin, chief investment officer at Cresset Wealth Advisors, said there are new questions about the US relationship with Saudi Arabia at a time when the Trump administration’s aggressive trade policies already have raised uncertainty.

“There’s just heightened global tensions,” Ablin said. “Countries are moving apart rather than coming together.”

Copyright AFP (Agence France-Press), 2018


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