• The Speaker of the House pulled the trigger in response to the US president reportedly withholding aid to Ukraine while pressuring its leader to investigate Democratic presidential candidate Joe Biden and his son.
  • Traders also recoiled after Trump criticized China's economic policies and warned of the "immense power" of social media platforms.
  • View Markets Insider's homepage for more stories .

European and Asian stocks and US futures dropped on Wednesday after Nancy Pelosi launched a formal impeachment inquiry into Donald Trump. Traders also recoiled after Trump criticized China's economic policies and warned of the "immense power" of social media platforms at the United Nations on Tuesday.

The Democratic Speaker of the House pulled the trigger in response to the US president reportedly withholding aid to Ukraine while pressuring its leader to investigate Democratic presidential candidate Joe Biden and his son.

"The actions taken to date by the president have seriously violated the Constitution," Pelosi said. "The president must be held accountable. No one is above the law."

The White House has agreed to release the transcript of Trump's phone call with Ukrainian President Volodymyr Zelensky, and plans to turn over the whistleblower complaint that followed the call and sparked the impeachment effort to Congress by Thursday, according to CNBC .

"You will see it was a very friendly and totally appropriate call," Trump tweeted on Tuesday . "No pressure and, unlike Joe Biden and his son, NO quid pro quo!"

A few hours later, he tweeted the impeachment inquiry amounted to "PRESIDENTIAL HARASSMENT."

Traders won't be thrilled by the prospect of several weeks of impeachment hearings and endless media speculation.

"Markets won't like the uncertainty it brings. In previous instances (Nixon, Clinton) there has been rockiness for equities and the dollar," Neil Wilson, chief market analyst for Markets.com, said in a morning note.

Wilson warned the inquiry has a "very low chance of success" given the Republican-controlled Senate is unlikely to support impeachment, and said it was "probably a storm in a tea cup."

Trump's UN speech didn't ease anxieties

Trump tempered hopes for a US-China trade deal on Tuesday as well.

"Not only has China declined to adopt promised reforms, it has embraced an economic model dependent on massive market barriers, heavy state subsidies, currency manipulation, product dumping, forced technology transfers and the theft of intellectual property and also trade secrets on a grand scale," he said at the UN General Assembly, according to Bloomberg .

Meanwhile, Chinese officials called for the Trump administration, which has slapped tariffs on billions of dollars' worth of Chinese goods and blacklisted Chinese companies such as Huawei, to ease off.

"China-US relations today have once again come to a crossroads," Wang Yi, China's Foreign Minister, said in New York on Tuesday, according to the South China Morning Post . "While China opens wider to the US and the rest of the world, we expect the US to do the same to China and remove all unreasonable restrictions."

"The political turmoil around Donald Trump's official impeachment inquiry, combined with rising fears of no agreement with China in October trade talks, turned the risk sentiment off across the global markets," Ipek Ozkardeskaya, senior market analyst at London Capital Group.

Trump also took aim at US tech companies, flagging their "immense power" and warning "a free society cannot allow social media giants to silence the voices of the people," according to Bloomberg . His comments helped to wipe a combined $56 billion from the market capitalizations of Facebook, Apple, Amazon, Netflix, and Alphabet-parent Google the so-called FAANG stocks.

Here's the market roundup as of 9:50 a.m. (4:50 a.m. EST):

  • European equities tanked in early trading. Germany's DAX slid 1.2%, Britain's FTSE 100 slumped 0.9%, and the Euro Stoxx 50 dropped 1.3%.
  • Asian indexes have plunged. China's Shanghai Composite fell 1%, Japan's Nikkei lost 0.4%, and Hong Kong's Hang Seng dropped 1.4%.
  • US stocks are set to open lower. Futures underlying the Dow Jones Industrial Average , S&P 500 , and Nasdaq were down between 0.2% and 0.5%.
  • Oil prices fell with West Texas Intermediate crude down 1.4% at $56.50, and Brent crude down 1.6% at about $62.10.
  • Bitcoin was down 14.8% at $8,287.

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