Donald Trump triggered a turbulent end to the week as stocks plunged after he called for a US government shutdown to “begin now” under Biden, rather than under his administration.
European stocks closed 0.8pc lower, cementing their biggest weekly decline in more than three months, after Mr Trump said: “If there is going to be a shutdown of government, let it begin now, under the Biden Administration, not after January 20th, under ‘TRUMP’.
“This is a Biden problem to solve, but if Republicans can help solve it, they will.”
The FTSE 100 fell as much as 1.3pc, the Cac 40 in Paris dropped by up to 1.4pc and the Dax in Frankfurt dropped as much as 1.6pc. They each closed down by 0.3pc, though the FTSE marked its worst week in more than a year.
The turbulence came after a spending Bill backed by Mr Trump failed in the US House of Representatives on Thursday as dozens of Republicans defied the president-elect.
The move leaves Congress with no clear plan to avert a fast-approaching government shutdown that could take effect from midnight and disrupt Christmas travel.
Wall Street’s main indices opened lower as the looming budget showdown combined with fears of high interest rates next year.
However, they have subsequently rebounded, with the S&P 500 up 1.7pc after the Federal Reserve’s preferred measure of inflation came in slightly lower last month than economists had expected.
This was an encouraging signal to traders following recent reports suggesting inflation may be tough to get all the way down to the Fed’s 2pc goal.
Earlier in the week the US Federal Reserve reduced its expectations for interest rate cuts next year. Policymakers forecast just two cuts in 2025, down from a prediction of four just three months ago.
