European stocks posted their biggest back-to-back drop since January as investors continued to retreat amid the turmoil surrounding U.S. President Donald Trump.
The Stoxx Europe 600 Index dropped 0.5 percent at the close, pushing the two-day decline to 1.7 percent. Equities slid amid a report that Trump’s campaign advisers may have had at least 18 previously undisclosed contacts with Russia. The VStoxx Index of euro-area stock volatility rose on Thursday, taking its two-day advance to 26 percent.
All but four industry groups declined, with beverage and real estate stocks retreating the most. The rally that followed Trump’s election on bets of stronger U.S. growth and increased fiscal spending is unraveling this week. The Stoxx 600 slumped the most in nearly eight months yesterday, mirroring global equities, after a news report that the U.S. president asked FBI Director James Comey to drop an investigation into a former top aide.
The allegations add to turmoil surrounding his administration. He faced criticism for firing Comey as a separate report on Monday said he revealed sensitive and highly classified intelligence to two Russian diplomats.
“The selloff on Wall Street yesterday showed how important hopes to see Trump boost economic growth have been for the market,” William De Vijlder, group chief economist at BNP Paribas, in a briefing in Paris. “Now investors are starting to rethink Trump ’s ability to deliver on his promises.” Equity strategists at Credit Suisse Group AG echoed the sentiment. It’s time to reassess the reflation trade as survey-based soft data in the U.S. will slow, while global macro momentum should remain robust, they wrote in a note.
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