Most Asian markets fell Monday and the dollar struggled on fears the collapse of Donald Trump’s repeal of Obamacare could mean he will struggle to push through his promised tax-cut and infrastructure spending policies.
In a severe early blow to the new administration, the healthcare reform was pulled Friday as it failed to garner enough support among Trump’s Republican party, who have a majority in both houses of Congress.
While the tycoon said he would now move on to tax reform, the failure of the bill — which was seen as a litmus test for his ability to push through his economy-boosting agenda — there is concern about future policies.
Global markets had surged since November on hopes the president’s pledges to overhaul the tax code, ramp up spending and deregulate markets would fire the already healthy economy.
“This was the first major attempt by the administration to reform the government and its miserable failure exposes the limits of President Trump,” Rodrigo Catril, a currency strategist at National Australia Bank in Sydney, told Bloomberg News
Tokyo’s Nikkei index led losers, shedding 1.5 percent by the break as the dollar retreated against the yen, while Toshiba dived on a report its troubled US nuclear unit is likely to start bankruptcy proceedings this week.
Sydney slipped 0.4 percent and Seoul gave up 0.3 percent. Singapore was 0.6 percent lower.
However, Hong Kong rebounded from early losses to edge up 0.1 percent and Shanghai gained 0.2 percent.
Greg McKenna, chief market strategist at AxiTrader, noted: “If health care was complex then so too will the tax be with the many moving parts and competing interests.”
On currency markets the greenback fell against its major peers and most high-yielding units, with the South Korean won up 0.9 percent, Malaysia’s ringgit 0.3 percent higher and the Indonesian rupiah up 0.2 percent.
“How quickly the Whitehouse administration can pivot to and get a convincing message across on tax reform will likely be the major focus early in the week,” said Stephen Innes, senior trader at OANDA.
“The markets are desperately seeking any glimmer of optimism that the tax reform agenda can unite Republicans.”
Euro/dollar: UP at $1.0845 from $1.0805
Pound/dollar: UP at $1.2520 from $1.2492
Dollar/yen: DOWN at 110.30 yen from 111.12 yen
Oil – West Texas Intermediate: DOWN five cents at $47.92 per barrel
Oil – Brent North Sea: UP one cent at $50.81 per barrel
New York – Dow: DOWN 0.3 percent at 20,596.72 (close)
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