News Archive

Trump pushes drugmakers for lower prices, more U.S. production

WASHINGTON/LOS ANGELES U.S. President Donald Trump in a meeting on Tuesday with pharmaceutical executives called on them to manufacture more of their drugs in the United States and cut prices, while vowing to speed approval of new medicines and ease regulation.

Trump told them the government was paying “astronomical” prices for medicines in its health programs for older, disabled and poor people and said he would soon appoint a new U.S. Food and Drug Administration leader.

“We’re going to streamline the FDA,” Trump said in a statement, referring to the regulatory agency responsible for vetting that new drugs are safe and effective.

The meeting between Trump and the pharmaceutical executives signaled a defusing of tensions that have kept drug stock prices in check since the presidential election. Shares of most of the group rallied on Tuesday following the meeting, even as the broader stock market slid.

“Trump is a populist above all else, and having these (drug) prices skyrocket, he’s commented that under his administration, this is not going to happen,” said market strategist Quincy Crosby of Prudential Financial in Newark, New Jersey.

She said Trump was playing a balancing act between controlling prices and loosening regulations. “I don’t think the majority of Americans want all regulations lifted from drug makers.”

Attending the meeting were top executives at Merck Co Inc, Johnson , Celgene Corp, Eli Lilly Co, Amgen Inc and Switzerland’s Novartis AG NOV N.S as well as the head of the Pharmaceutical Research and Manufacturers of America (PhRMA) lobbying group.

According to a transcript of the televised portion of the meeting, Amgen Chief Executive Officer Robert Brad way promised to add 1,600 U.S. jobs at his California-based biotechnology company this year.

Amgen clarified in an email that it currently employs around 20,000 people worldwide, including 12,000 in the United States, and said the 1,600 includes new staff as well as hires to address attrition.

Celgene, Lilly, Merck and Amgen said by email after the meeting that they were encouraged by Trump’s focus on innovation, tax reform and the need for a more value-driven health care system.

Lilly said discussion topics also included stronger trade agreements and removing “outdated regulations that drive up costs and slow innovation.”

PhRMA echoed those points in its own post-meeting statement, adding that the policies, if enacted, would result in up to 350,000 new jobs over the next 10 years.

“Tax, deregulation – those are things that could really help us expand operations,” Lilly CEO Dave Ricks said.

Officials at Novartis and JJ did not immediately respond to requests for additional comment.

Shares of the six companies were mostly higher, for an overall gain averaging 0.7 percent, compared with a 0.4 percent drop in the broad SP 500. The Nasdaq Biotech Index was up 1.2 percent, reversing earlier losses, and the SP 500 health care index gained 0.6 percent.


“We have to get prices down for a lot of reasons. We have no choice, for Medicare and Medicaid,” Trump said, citing the nation’s government insurance programs for the elderly, the poor and the disabled.

Trump also said currency devaluation by other countries had increased drugmakers’ outsourcing their production, and he called on the companies to make more of their products in the United States.

Foreign countries must pay a fair share for drug development costs, he added. “We’re going to end global freeloading.”

The United States typically pays more for drugs than any other developed nation. Most Western European countries, as well as Japan, have government-run health care coverage under which drug prices are negotiated.

High drug prices have become a national issue during the past two years as healthcare costs have risen Trump spooked pharmaceutical and biotech investors by saying on Jan. 11, before his inauguration, that drug companies were “getting away with murder” on what they charged the government for medicine and that he would do something about it.

Company executives, meanwhile, have tried to tread a careful line in defending their industry while expressing optimism that the United States would continue to reward scientific advances.

“Regulations – great, streamlining the FDA, perhaps,” Jack Ablin, chief investment officer at BMO Private Bank in Chicago said. “But if Trump is going to address his constituency, drug prices have to come down. So I think this is maybe a Pyrrhic victory.”

(Additional reporting by Eric Beech, Ben Hirschler, John Miller, Chuck Mikolajczak, Rodrigo Campos, Susan Heavey and Caroline Humer; Editing by Lisa Von Ahn and Cynthia Osterman)

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U.S. oil producer ConocoPhillips raises quarterly dividend

ConocoPhillips (COP.N), the largest U.S. independent oil producer, raised its quarterly dividend by 6 percent to 26.5 cents per share.

The Houston, Texas-based company had announced a quarterly dividend of 25 cents per share in October.

(Reporting by John Benny in Bengaluru; Editing by Savio D’Souza)

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Wall Street down on earnings; political concern weighs

NEW YORK U.S. stocks fell on Tuesday, dragged down by economic growth-sensible sectors, amid disappointing earnings and continued concern over the priorities of the Trump administration.

Technology and financials were the sectors that weighed the most on the SP 500 while healthcare helped cut losses. U.S. President Donald Trump met with top executives from some of the biggest drugmakers in a move seen as lowering tensions that have kept drug stocks in check since the presidential election.

The NYSE Arca Pharmaceutical index .DRG gained 1 percent. The index was unchanged from the Nov. 8 election to Monday’s close, having risen more than 6 percent at one point.

But stocks fell broadly as some worried that Trump’s focus was not on the issues that triggered a market rally after his election, like tax reform and a fiscal stimulus.

U.S. stocks are “pulling back on the building trepidation that maybe we’re going to see not just a renegotiation of trade agreements but maybe an all-out trade war, which is something the market doesn’t want at all,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

“If tomorrow we talk about reform and deregulation of the financial industry, you’ll see this market turn on a dime.”

The Dow Jones Industrial Average .DJI fell 130.19 points, or 0.65 percent, to 19,840.94, the SP 500 .SPX lost 5.55 points, or 0.24 percent, to 2,275.35 and the Nasdaq Composite .IXIC dropped 7.94 points, or 0.14 percent, to 5,605.77.

The SP 500 was on track for its largest two-day drop in three months, with Monday’s decline pinned to investor concerns over a curb on immigration ordered by Trump on Friday.

Package delivery company UPS (UPS.N) fell 6.8 percent to $109.05, weighing the most on the industrial sector, after posting a quarterly loss and issuing a full-year profit forecast that missed expectations.

Industrials .SPLRCI were the day’s largest decliners among SP 500 sectors.

Under Armour lost nearly a fourth of its market value, down 23.5 percent to $19.20.

The dollar fell 0.86 percent against a basket of currencies .DXY after Trump’s top trade adviser, Peter Navarro, accused Germany of using a “grossly undervalued” euro to gain a competitive advantage.

Despite the sharp market moves triggered by political headlines, some trust the fundamentals will prevail. Corporate earnings are expected to have grown 7.1 percent over the last quarter of 2016 with revenues rising 4.2 percent, according to Thomson Reuters data.

“There’s good momentum in the economy, the labor market is doing well; the U.S. is fundamentally good but you have this political uncertainty,” said Paul Zemsky, chief investment officer, Multi-Asset Strategies and Solutions at Voya Investment Management in New York.

In that scenario, Zemsky thinks this is a ‘buy the dip’ kind of market.

“Earnings are going to continue to rise and the tweets and the news and the legislation are going to be stocks-friendly overall; not every tweet, but the trend will be business-friendly -which should be equity market-friendly.”

A two-day meeting of the Federal Reserve’s policy-setting committee is under way and also on investors’ radars. The central bank is not expected to raise rates but investors will focus on how policymakers view the economy under a Trump presidency.

The SP 500 posted 9 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 66 new highs and 45 new lows.

(Reporting by Rodrigo Campos; Editing by Nick Zieminski)

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Insurer Aetna sees Obamacare changes ahead; no word on Humana

Health insurer Aetna Inc (AET.N) said on Tuesday it lost more money than expected on the Obamacare individual insurance plans, one of the main pillars of the Affordable Care Act that President Donald Trump is working to “repeal and replace.”

Aetna Chief Executive Officer Mark Bertolini also predicted years of transition in that individual insurance business but said it presents opportunities as new products are developed that appeal to younger and healthier people.

Bertolini said the company is weighing how to proceed after a federal court ruled last week against its $34 billion deal for Humana Inc (HUM.N) on antitrust grounds. He said Aetna, the No. 3 U.S. health insurer, may decide to appeal or there could be a deal extension, which it will announce before the current Humana agreement’s end date of Feb. 15.

Aetna, along with UnitedHealth Group Inc (UNH.N), has largely exited the individual business for 2017, but has remained on exchanges in four states. It has 240,000 customers in individual plans and said it expects to post a loss again this year on the business.

Bertolini said in an interview that the Hartford, Connecticut, company will not enter any new markets with exchange Obamacare plans in 2018, and will decide in the next few months if it will re-enter Delaware, Iowa, Nebraska and Virginia, where it now sells these plans.

Like many insurers, he said Aetna feels structural changes are needed to account for the higher medical costs of participants in the Obamacare exchange market for individuals. He said the company is talking to lawmakers and regulators about how to make these changes as Trump and Republicans consider new legislation and rules.

Aetna said it lost $450 million on the Obamacare business in 2016, including $100 million more than expected during the fourth quarter. The company expects lower losses in 2017.


Aetna said it was still deciding how to proceed on Humana, but analysts said they thought it was unlikely a deal would go forward.

“Investors would want to know if they are extending the agreement or not. Or if they are appealing or not,” Leerink Partners analyst Ana Gupte said. “In some ways I think investors don’t want any appeal. They want an accelerated share repurchase and then to just move on.”

The U.S. Justice Department filed a lawsuit in July to block Aetna’s purchase of Humana and Anthem Inc’s (ANTM.N) $54 billion deal to buy Cigna Corp (CI.N), saying they would raise prices. There has been no ruling on Anthem’s deal yet.

Earlier on Tuesday, Aetna said fourth-quarter net profit fell to $139 million, or 39 cents per share, from $321 million, or 91 cents per share, a year earlier. That included a $215 million expense for a voluntary early retirement program.

Excluding items, Aetna earned $1.63 per share, above the analysts’ average estimate of $1.44, according to Thomson Reuters I/B/E/S.

Aetna’s medical benefit ratio, the percent of premiums spent on claims, rose to 82.1 percent from 81.9 percent. The lower that ratio, the more the insurer profits. The ACA mandates the level be no lower than 80 percent.

Total revenue rose about 5 percent to $15.73 billion, but missed the analysts’ average estimate of $15.86 billion.

The company said it expected 2017 operating earnings of at least $8.55 per share. Analysts’ on average were estimating $8.79.

Aetna shares were up 0.5 percent at $117.25 on Tuesday afternoon.

(Reporting by Caroline Humer in New York and Ankur Banerjee in Bengaluru; Editing by Lisa Von Ahn and Matthew Lewis)

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Warren Buffett: I bought $12 billion of stock after Trump won

The failure of Warren Buffett’s favored candidate to capture the White House has not dimmed the billionaire’s appetite for stocks.

Buffett revealed that he has bought $12 billion of stock for his company Berkshire Hathaway Inc (BRKa.N) since the Republican Donald Trump beat Democrat Hillary Clinton in the Nov. 8 U.S. presidential election.

In an interview with talk show host Charlie Rose that aired on Friday night, Buffett suggested that Berkshire’s post-election stock purchases overall were even higher, reflecting stocks that his deputies Todd Combs and Ted Weschler bought.

“We’ve, net, bought $12 billion of common stocks since the election,” Buffett said. “The guys that work with me, the two fellows, they probably bought a little bit or sold a little bit too.”

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The speed with which Berkshire is buying stocks is unusual. It has spent in fewer than three months roughly half what it spent on equities in the three years ending Sept. 30, 2016.

Buffett demurred on whether Berkshire has added to its stakes in the four largest U.S. airlines: American Airlines Group Inc (AAL.O), Delta Air Lines Inc (DAL.N), Southwest Airlines Co (LUV.N) and United Continental Holdings Inc (UAL.N).

Berkshire revealed those stakes in mid-November, surprising many given Buffett’s long aversion to the sector.

Asked why Berkshire dove in, Buffett said: “It was in large part my decision.”

Berkshire will likely by Feb. 14 disclose some of the stocks it has bought, in a regulatory filing listing most of its U.S. holdings as of year end.

The Omaha, Nebraska-based conglomerate owned $102.5 billion of equities as of Sept. 30, excluding its stake in Kraft Heinz Co (KHC.O).

U.S. stocks rose after Trump was elected, reflecting investor optimism that his policies might boost economic growth, aided by a Congress also under Republican control.

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Buffett said Trump is unlikely to reach his goal of 4 percent annual growth, but that growth at half that level would over a generation add $19,000 per person to real gross domestic product.

“Two percent will produce miracles,” Buffett said.

The U.S. economy grew by 1.6 percent last year, the lowest since 2011.


(Reporting by Jonathan Stempel in New York; Editing by Jennifer Ablan, Bernard Orr)

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Exxon boosts capital budget but takes $2 billion charge from XTO deal

HOUSTON Exxon Mobil Corp boosted its 2017 capital budget on Tuesday on a bet that oil prices have stabilized, but posted its lowest quarterly profit since 1999 as it took a $2 billion charge against the value of natural gas reserves from its buyout of XTO Energy.

The world’s largest publicly traded oil producer wrote down the book value of part of its North American natural gas and crude reserves, some of which were acquired in 2009’s all-stock buyout of XTO Energy, a deal worth roughly $30 billion at the time.

After conducting an annual asset review, Exxon said the value of some reserves in North America’s Rocky Mountain region should be lowered due to weak performance and its own tepid outlook on the potential for future commodity price rises. Exxon declined to provide its internal forecast for oil and gas prices.

Exxon will report estimates for the value of its proved reserves in February. The $2 billion impairment charge likely will reduce the value of the proved reserves.

Wall Street traders expect oil prices to stay near their current range, between $54 and $55 per barrel, for several years and for natural gas prices to remain near their current level, about $3.13 per million cubic feet. 0#CLCAL:

Exxon also said it will increase spending to about $22 billion this year from $19.3 billion in 2016. The move came after peers Chevron Corp, Hess Corp and other oil producers boosted their capital budgets for the year.

The 14 percent boost in capital expenditures and the writedown reflect a delicate balancing act by oil and natural gas companies in an era of extreme volatility after a two-year price rout.

The higher spending is not due to rising prices for oilfield contract work or other services, Jeff Woodbury, Exxon’s vice president of investor relations, said on an earnings conference call with investors.

“It is, by an large, a function of activity level” increasing, Woodbury said.

Exxon’s announcement came after the company posted a better-than-expected quarterly profit, helped by rising oil prices and lower costs.

The results reflected the slow and steady improvement in the global oil and gas industry as commodity prices inch higher after a two-year rout.

The quarterly report was Exxon’s first under Chief Executive Officer Darren Woods. Rex Tillerson, the former CEO, has been nominated by U.S. President Donald Trump to be secretary of state and is awaiting confirmation.

Fourth-quarter earnings fell to $1.68 billion, or 41 cents per share, from $2.78 billion, or 67 cents per share, in the year-ago period.

Excluding the $2 billion writedown, Exxon earned 90 cents per share. By that measure, analysts expected 70 cents per share, according to Thomson Reuters I/B/E/S.

Production fell 3 percent to 4.1 million barrels of oil equivalent per day.

Earlier this month Exxon said it would pay up to $6.6 billion to double its holdings in the oil-rich Permian Basin of west Texas, the largest oil field in the United States.

Shares of Texas-based Exxon fell 1.7 percent to $83.40 in afternoon trading.

(Editing by Chizu Nomiyama and Jeffrey Benkoe)

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As Trump thunders, investors watch for rain

BOSTON A dizzying stream of market-moving tweets and policy talk by President Donald Trump is finding a hopeful but anxious audience among professional investors looking to make stockpicking great again.

After years of losing ground to index funds, portfolio managers and wealth advisers say Trump’s assertive moves, like singling out individual companies, may create a chance to set their investment strategies apart – even if they think some of Trump’s verbal assaults are just bluster. “If he’s going to create volatility, we’re going to take advantage of it,” said Ross Gerber, president of California wealth management firm Gerber Kawasaki Inc.

Professional stockpickers are under pressure to improve returns as investors increasingly turn to cheaper passive investments – redirecting tens of billions of dollars each month.

Trump’s pledge to shake up regulations affecting sectors such as finance, autos and healthcare, as well as his promise to cut taxes, could create big corporate winners and losers. That could give active fund managers an opportunity, in theory, to showcase their skills.

“This administration was elected with many people hoping for change, and that’s going to upset the apple cart with old losers coming back in favor,” said Scott Schermerhorn, chief executive of Granite Investment Advisors in New Hampshire.

So far, Schermerhorn has made few changes to his portfolios, like the Granite Value Fund (GVFIX.O). With Trump in office less than two weeks, he is waiting for clearer signs on what new policies will be introduced.

Schermerhorn also said he has talked some clients out of bailing on stocks such as Boeing (BA.N) or drugmakers after Trump criticized them publicly on Twitter – tweets Schermerhorn said he read as simply negotiating positions.

Gerber has already acted on Trump. After the then-president-elect slammed Lockheed Martin’s F-35 fighter jet program as too expensive on Dec. 12, Gerber bought Lockheed shares.

Trump said on Monday his administration was able to cut $600 million from its latest contract for the jet, but Gerber said the case for the stock remains its longer-term outlook.

“Bullying companies ultimately won’t change the economics,” he said.


The turn to passive management reflects how many active managers have failed to produce the higher returns that would justify their more costly fees.

In theory, if Trump produces winners and losers in corporate America, then active managers could be helped by a rise in “dispersion,” a measure of the gap in returns among stocks. During December, dispersion in the SP 500 index was 14 percent, the lowest in two years, according to SP Dow Jones Indices.

“The friend of active management is high dispersion, and transitions. We think we have both of those,” said Collin Bell, a managing director at Goldman Sachs’ (GS.N) asset management division. But dispersion is a double-edged sword if fund managers wind up on the wrong side of a trade – a distinct possibility given Trump’s willingness to talk policy on social media and re-evaluate key foreign policy principles. His recent move to curb immigration has sent major U.S. stock indexes plummeting.

“Trying to react to his tweets, for a long-term investor, I think is a very dangerous game to play,” said John Linehan, portfolio manager of the $23 billion T. Rowe Price Equity Income Fund. (PRFDX.O)

He said he spends more time following policy discussions, after years in which Washington’s actions did not affect particular stocks so much. Linehan cited the on-again, off-again talk of a “border adjustment tax” as the sort of issue to keep an eye on.

A recent jump in volatility has been a boon for day traders, who have a short-term horizon. But Trump’s tweets are too sporadic for many of the quantitative strategists from hedge funds and banks, who track patterns and trends.

Indeed, higher dispersion could provide a business opportunity for active stockpickers’ arch-rivals, the passive funds. To shield investors from stock gyrations, Michael LaBella, portfolio manager at Legg Mason Inc’s (LM.N) QS Investors unit, said it encourages investors to consider diversification products like its Low Volatility High Dividend ETF (LVHD.O) in case promised policy changes do not actually emerge.

“Because there is so much policy uncertainty, you can’t differentiate what’s policy and what’s just bluster,” he said.

(Reporting by Ross Kerber; Editing by Dan Grebler)

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Deutsche Bank fined for $10 billion sham Russian trades

NEW YORK/FRANKFURT Deutsche Bank (DBKGn.DE) has agreed to pay $630 million in fines for organizing $10 billion in sham trades that could have been used to launder money out of Russia, the latest in a string of penalties that have hammered the German lender’s finances.

In two detailed reports, U.S. and British regulators criticized the bank for not knowing the customers involved or the source of money for the trades, which helped buoy revenue during a slowdown following the global financial crash.

The scheme involved so-called mirror trades carried out between 2011 to 2015 – for instance, buying Russian stocks in roubles for a client and selling the identical value of a security for U.S. dollars for a related customer.

The New York Department of Financial Services outlined a web of trades “converting roubles into dollars through security trades that had no economic purpose” and stretched from Moscow, London and New York to Cyprus and the British Virgin Islands.

“I have a billion rouble today … will you be able to find a security for this size,” the watchdog cited one party to a deal as telling a Deutsche Bank trader in Moscow.

The regulator said the bank had missed numerous opportunities to prevent the scheme. “These flaws allowed a corrupt group of bank traders and offshore entities to improperly and covertly transfer more than $10 billion out of Russia.”

It said the scheme – in which the parties involved often lost money on the trades due to fees and commissions – could have been used for money laundering.

While U.S. and British regulators – which fined Deutsche $425 million and $204 million respectively – penalized the bank for not having adequate controls, they did not say top management was aware of the improper nature of the trades.

The fines – which comes weeks after a $7.2 billion U.S. penalty for the sale of toxic mortgage debt – marks another step in Deutsche Chief Executive John Cryan’s attempts to draw a line under the bank’s misdeeds in the wake of the financial crisis, as it sought to carve and then keep a foothold on Wall Street.

That has left a costly legacy of billions of euros of fines. Germany’s biggest bank is expected by analysts to report a loss later this week for 2016 of more than 650 million euros.

The bank’s shares were up 1 percent at 18.82 euros at 1230 GMT.


Karl von Rohr, Deutsche Bank’s chief administrative officer, said the bank regretted its role in the Russian trades scheme and that it had since acted to address shortcomings.

He cautioned, however, that other authorities were investigating the trades and that the matter was not yet closed.

The U.S. Department of Justice is not part of the deal and is still looking into the trades. A spokesman declined to comment on its inquiry.

Among a host of legal claims, two large cases remain: an inquiry into alleged foreign exchange manipulation and an investigation of its processing of some dollar payments in countries under U.S. embargo.

The British fine, from the Financial Conduct Authority, is the largest financial penalty for anti money-laundering controls failings yet imposed by the regulator.

In a damning report, it said Deutsche had failed to have proper controls to stop customers transferring billions from Russia to offshore bank accounts “in a manner that is highly suggestive of financial crime”.

It said Deutsche had been unable to determine who many of its customers were, citing missing identification documents, lack of information about corporate ownership and poorly understood foreign-language paperwork.

The U.S. regulator found Deutsche Bank’s Moscow traders facilitated the scheme, with most of the trades placed by a single trader representing both sides of the transaction.

Traders did not question the suspicious trades because it made for easy commissions, it said.

Deutsche Bank has previously said it has taken disciplinary measures against certain employees. It has also cut back on its investment banking activities in Russia.

The bank will report its financial results for 2016 on Thursday.

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Asian shares rattled by Trump policy worries, dollar soft

TOKYO Asian shares slipped on Tuesday as stringent curbs on travel to the United States ordered by President Donald Trump brought home to investors that he is serious about carrying out his controversial campaign pledges.

Global stocks posted their biggest loss in six weeks on Monday after Trump signed an executive order to bar Syrian refugees indefinitely and suspend travel to the United States from seven Muslim-majority countries, sparking widespread protests.

European bourse are expected to remain fragile after big losses on Monday, with spread-betters seeing opening losses of as much as 0.1 percent in major indexes, including Britain’s FTSE .FTSE, Germany’s DAX .GDAXI and France’s CAC .FCHI.

“Investors are becoming worried as it appears as if he was setting fire to geopolitical risks that already exist,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.

Trump’s move drew criticism from some U.S. policymakers, and business leaders, with technology companies, which depend on talent from around the world, planning to discuss a legal challenge.

“His stance is really inward-looking, making investors nervous about his ‘moderateness’,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.5 percent while Japan’s Nikkei .N225 dropped 1.7 percent, its biggest fall in almost three months.

On Monday, the U.S. SP 500 Index .SPX fell 0.6 percent, its biggest fall in a month, though it remained well above levels seen before the Nov. 8 presidential election.

MSCI’s gauge of the world’s 46 stock markets .MIWD00000PUS shed 0.6 percent, its largest loss in a month and a half.

The mood soured further when Trump fired the federal government’s top lawyer after she took the extraordinarily rare step of defying the White House.

U.S. stock futures ESc1 shed 0.3 percent on Tuesday and the dollar extended losses against the yen.

Still, most share prices were up on the month, supported by signs of accelerating momentum in the global economy and hopes of large fiscal stimulus from Trump.

MSCI’s ex-Japan Asian shares index was up 5.7 percent this month while its index of world markets was up 2.5 percent. They were also higher than their levels before the U.S. elections.

In the currency market, the dollar was broadly weak and fell 0.3 percent against the yen to 113.49 yen JPY=. It was down 3.1 percent so far this month, after three straight months of sizable gains.

The Japanese currency showed no reaction after the Bank of Japan kept its policy on hold, as expected. A string of recent data has suggested the economy is slowly regaining traction.

The euro EUR= edged up to $1.0710, consolidating after its rebound this month from its 14-year low of $1.0340 set on Jan. 3.

In a possible sign of increased anxiety among investors, the safe-haven Swiss franc strengthened to a seven-month high of 1.0637 franc per euro EURCHF= on Monday.

Worries are also growing about a political shift to populist leaders in Europe.

French bond yields FR10YT=RR rose to the highest level since September 2015, on rising uncertainty over the Presidential election later this year.

Conservative leader Francois Fillon, seen as the front-runner, is now battling to contain a scandal over allegedly unlawful payments to his wife while the Socialists on Sunday picked a hard-left candidate, possibly helping popular far-right leader Marine Le Pen.

Italian debt yields IT10YT=RR climbed to 1 1/2-year highs partly as early elections could be called following a ruling from the country’s constitutional court last week.

Italian assets have also been hit by worries over its banking sector after UniCredit (CRDI.MI), the country’s biggest bank, revealed on Monday it expects to book a net loss of around 11.8 billion euros ($12.6 billion) for 2016 and fall short of European Central Bank capital requirements.

By contrast, the yield on German debt DE10YT=RR fell on Monday even as data showed inflation in Germany hit a 3 1/2-year high in January.

News that Germany posted a national inflation rate of 1.9 percent stoked talk of an unwinding of monetary stimulus by the ECB, even though the inflation outcome was below expectations.

Elevated uncertainty about Trump’s policies, including a lack of detail so far on his plans for tax cuts and fiscal spending, offset optimism on the U.S. economy.

Data on Monday showed U.S. consumer spending accelerated in December while inflation showed some signs of picking up last month.

The core PCE price index, the Federal Reserve’s preferred inflation measure, rose 1.7 percent on a year-on-year basis after a similar gain in November.

“We’ve seen a jump in U.S. economic sentiment after Trump’s victory. But the improvement in hard economic data remains moderate,” said Haruka Kazama, senior economist at Mizuho Research Institute.

“And if Trump takes more steps to limit permits for immigrants, that would surely boost inflation as the U.S. is now near a full employment,” she added.

The Federal Reserve, which will start its two-day policy meeting on Tuesday, is widely expected to keep interest rates unchanged as it awaits greater clarity on Trump’s economic policies.

Oil prices dipped as rising U.S. drilling activity offset efforts by OPEC and other producers to cut output in a move to prop up the market.

Brent crude futures LCOc1, the international benchmark for oil prices, were trading at $55.14 per barrel, down 0.2 percent from Monday’s settlement price.

(Reporting by Hideyuki Sano; Editing by Eric Meijer and Kim Coghill)

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