Mar 22, 2017
Global stocks fall amid doubt over Trump’s healthcare plan
, Reuters
Most U.S. and European share indexes fell on Wednesday as concerns over potential delays to President Donald Trump's pro-growth policies again unnerved investors, while safe-haven gold, U.S. Treasuries, and the yen rallied.
The benchmark U.S. S&P 500 stock index briefly hit its lowest level in five weeks, while the FTSEurofirst 300 index of top European shares hit a roughly two-week low as investors increasingly worried about whether Trump would be able to push ahead with his pro-growth policies.
Trump on Tuesday tried to rally Republican lawmakers behind a plan to dismantle Obamacare, his first major legislation since assuming office in January. Some investors fear that if the healthcare reform act runs into trouble or takes longer than expected to pass, then Trump's tax reform policies may face setbacks.
Caution continued to prevail a day after the S&P 500 closed down 1.2 per cent in its worst daily performance since Oct. 11. CBOE's VIX index, known as the "fear gauge", briefly topped 13 for the first time since mid-January on Wednesday, but was last down 1 per cent at 12.31.
"The markets were reminded yesterday the 'Trump trade' is not a one-way trade and there's room for disappointment as actions on tax cuts and infrastructure spending might not materialize as quickly as we want," said Anastasia Amoroso, global market strategist at J.P. Morgan Private Bank in Houston.
"The pronounced fall in yields across the world is not helping market sentiment at the moment either."
MSCI's all-country world equity indexwas last down 1.9 points, or 0.42 per cent, at 446.15.
The Dow Jones Industrial Average was down 52.52 points, or 0.25 per cent, at 20,615.49. The S&P 500 lost 1.22 points, or 0.05 per cent, to 2,342.8. The Nasdaq Composite was up 8.26 points, or 0.14 per cent, at 5,802.08.
Europe's broad FTSEurofirst 300 index was last down 0.53 per cent at 1,473.18.
The cautious mood stoked demand for gold, U.S. government debt, and the Japanese yen, with spot gold prices touching a three-week high of US$1,250.51 an ounce and the dollar hitting a four-month low against the yen of 110.76 yen.
Yields on benchmark 10-year U.S. Treasury notes hit a more than three-week low of 2.375 per cent as their prices rallied.
Benchmark Brent crude oil prices fell to a nearly four-month low of US$49.71 a barrel and U.S. crude prices hit their own nearly four-month trough of US$47.01 a barrel after data showed U.S. crude inventories rising faster than expected, piling pressure on OPEC to extend output cuts beyond June.
The dollar index, which measures the greenback against a basket of six major rivals, was last down 0.2 per cent at 99.634 after hitting a nearly seven-week low of 99.609 earlier.
"People are losing confidence in a swift moving set of congressional reform,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.
