Article / 27 March 2017 at 7:00 GMT

Morning Markets: Stocks retreat after Trump's Obamacare defeat

Consulting editor / TradingFloor
Norway







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Watchlist

  • Germany: Ifo business climate survey (0800 GMT) 
  • Eurozone: Private household sector loans (0900 GMT) 
  • Brazil: Consumer confidence index (1000 GMT)


A softer US dollar hit Asia-Pacific stocks on Monday, while a flight to safety propelled bonds and gold higher after worries spread across markets about the implications of US president Donald Trump’s failure to repeal Obamacare.  

The defeat in Congress casts doubts over Trump's ability to push through his administration's other proposals, including tax reform and stimulus.

Japan was the worst-performing Asia-Pac stock market, with the Nikkei 225 down 1.5%, but the Shanghai Composite was flat.

US stocks retreated on Friday after the news that Trump had withdrawn the Republican healthcare bill. The Dow and S&P500 closed lower, and the Nasdaq composite index ended off highs and just barely in positive territory.

Oil prices initially rose, but later fell, after Opec and non-Opec producers agreed on Sunday in Kuwait to consider extending production cuts beyond June. But the meeting caused confusion by leaving it to an expert committee to "review the oil market conditions and revert" in April, which analysts said would come as a disappointment and drag oil prices lower.

After the Republican legislative defeat on Friday, Trump said he would go after tax reform as the next item on his agenda -- another tricky proposition.

Markets are also jittery as British prime minister Theresa May is said to be just days away from notifying the European Union of her government’s plans for exiting the EU by triggering Article 50 of the Lisbon Treaty.

Market signals

Asian session

  • Asian markets opened lower after the US president's legislative defeat on healthcare
  • Japan's Services PPI rose 0.8% in the year to February
  • Toshiba shares fell on reports that its US unit Westinghouse may file for bankruptcy
  • Nikkei nosedived; it was down 1.49% to 18,975.87 at 0228 GMT
  • Russia is not ready to back any Opec extension of its crude output curbs
  • Weak commodity prices weighed on the S&P/ASX200
  • Australia's ASX200 finished 0.15% lower at 5,747 points

Forex ahead

  • US dollar dropped to a near two-month low against a basket of currencies
  • This was on mounting concerns about chances of US fiscal stimulus
  • The flagging USD was worth only ¥110.3850 at 0245 GMT
  • Aussie trading largely flat at US76.21¢ after commodities and local shares sold off

From the Floor

Oil doubts. “Some uncertainty about whether Opec will be able to extend the current deal which expires in June and needs to be extended,” says Hansen.

Risk-off. “We start the week with more risk-off after the missing healthcare reform vote,” says Fasdal.

New page. “Trump’s defeat on Friday is really the new narrative,” says Garnry. “It will be crucial today to watch the financials.”


Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

1..2..3
Today’s survey figures from Ifo will reaffirm that Germany’s economy is still humming along at a healthy pace, writes James Picerno.

China effect
Fresh curbs on lending in the housing market in China have fed into falling iron-ore prices across Asia,
says Sydney's Saxo trading team.


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Representatives from some nations taking part in Opec's output curbs met in Kuwait (above) on Sunday, and agreed to review a six-month extension of the constraints. Photo: Shutterstock

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