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US markets slump on news of former security adviser's Russia probe testimony

Hannah Boland
Michael Flynn pleaded guilty to lying to the FBI over his links to Russia - REUTERS

US stocks were on a rollercoaster ride on Friday, plunging almost 300 points from a record high after it emerged that Donald Trump's former national security adviser was prepared to testify against a "very senior" member of the president's team in a Russia probe.

The Dow Jones Industrial Average tanked as much as 1.3pc, or 292 points, on Friday on the news, before recovering to 24,231.59, down 0.17pc, in late trade. The S&P 500 gave up 5 points, or 0.2pc, and the Nasdaq dropped 26 points, or 0.4pc. 

Although the member of the team was not named by the US government, media reports said Michael Flynn was going to testify against the president himself as part of a plea deal, and claim that he was directed by Mr Trump to make contact with Russians when he was the presidential candidate.

Mr Flynn has pleaded guilty to lying to the FBI over his links to Russia.

However, White House lawyers said: "Nothing about the guilty plea or the charge implicates anyone other than Mr Flynn."

Mizyho strategist Antoine Bouvet said: "The market is reacting to this ABC report that Mr Trump can be incriminated by Mr Flynn's testimony.

"If it is true, then the market should be pricing a lower likelihood of Mr Trump's economic agenda being implemented. But it's hard to tell how much substance there is behind it at this stage, at best its a distraction from the tax reforms."

US stocks had closed at a record high on Thursday, breaking the 24,000 mark for the first time following an endorsement for the Republican tax plan from Senator John McCain.

The Senate is voting for the tax plan on Friday, and has said it has the votes for the bill to go ahead. The main reform detailed in the plan is cutting the US’s 35pc corporate tax rate to 20pc.