Global Stocks Pressured By Trump Health Care Reform Setback

Global stock markets were pressured Tuesday by worries about President Donald Trump’s agenda after a proposed health care reform measure collapsed in Congress, raising concerns about prospects for his tax reform.

Bourses in Paris and Frankfurt shed more than one percent, while London and Tokyo also retreated.

US stocks were mixed, with the Nasdaq rising to a fresh record. The tech-rich index was lifted by Netflix, which soared 13.5 percent on blowout earnings that also propelled Amazon, Facebook and Tesla Motors, among others.

But the Dow retreated, and the dollar fell against the euro as currency traders slashed the odds of a generous US tax cut that had been expected in the Trump era.

“Dysfunction, drama and ethical issues in the White House have combined with Republican infighting on Capitol Hill to bog down the policy agenda,” said a note from Charles Schwab.

“There’s growing concern among congressional Republicans that the much-anticipated policy changes will need to be significantly scaled back — or that they may not happen at all.”

The latest round of Trump doubts was induced by Senate Republican leaders’ decision to abandon efforts to repeal Obamacare following opposition from within their own party.

Since Trump’s election victory in November, the dollar has soared along with global markets on hopes his big-spending, tax-cutting policies would fire up the world’s top economy and fan inflation. But seemingly never-ending crises have hobbled his presidency from the start.

“The failure of the latest attempt at healthcare legislation further reduced already very low odds of any meaningful legislation on taxes or infrastructure spending and marked the latest blow to the concept of the ‘Trump reflation trade,'” said Omer Esiner, analyst at Commonwealth Foreign Exchange.

“In a week void of any major economic reports in the US, the latest signs of legislative morass in Washington took center stage to send the dollar broadly lower.”

The euro broke above the $1.15 mark for the first time since last June, with eyes on the European Central Bank’s policy meeting Thursday.

While ECB chief Mario Draghi is not yet expected to announce any tightening measures, there is speculation the central bank will begin winding down its stimulus program as the eurozone economy improves.

The pound retreated on official data showing annual British inflation unexpectedly slowed to 2.6 percent in June, dimming the prospect of a Bank of England interest rate hike any time soon.

New York – DOW: DOWN 0.3 percent at 21,574.73 (close)

New York – S&P 500: UP 0.1 percent at 2,460.61 (close)

New York – Nasdaq: UP 0.5 percent at 6,344.31 (close)

Euro/dollar: UP at $1.1554 from $1.1479

Pound/dollar: DOWN at $1.3042 from $1.3057

Dollar/yen: DOWN at 112.03 from 112.61

Oil – Brent North Sea: UP 42 cents at $48.84 per barrel

Oil – West Texas Intermediate: UP 38 cents at $46.40 per barrel

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