Jitters hurt share market
Investor jitters over the prospects of US President Donald Trump’s (above) ambitious reform agenda have seen the Australian share market stumble.
INVESTOR jitters over the prospects of US president Donald Trump’s ambitious reform agenda have seen the Australian share market stumble to its worst session since November’s US election.
As the president’s controversial healthcare bill threatened to drive a wedge through his Republican colleagues ahead of tonight’s vote in the House of Representatives, global investors took the division as indicative of a wider malaise in the Trump administration.
Australian markets were yesterday handed their weakest lead from Wall Street since Mr Trump’s meteoric rise to the White House, with the Dow Jones Industrial Average sliding 1.1 per cent to a onemonth low.
At home, the benchmark ASX 200 index tumbled 1.6 per cent to 5684.5 points, with more than $25 billion wiped from the value of the nation’s top listed companies.
Only real estate and gold stocks were left unscathed as investors scrambled to trim their exposure.
Financials and healthcare stocks were among the worst hit, sliding 2.1 per cent and 1.6 per cent, respectively.
ANZ was the worst performer among the big four banks, shedding 2.6 per cent to $30.76.
Blood products manufacturer CSL, which derives twofifths of its revenue from the US, fell 2 per cent to $122.58.
Bionic ear maker Cochlear, which is also heavily exposed to US currency fluctuations, shed 1.6 per cent to $130.34.
Analysts highlighted the friction over the US healthcare overhaul, which some conservatives have dubbed “Obama— care lite” due to its perceived similarities to former president Barack Obama’s model. They said this was symptomatic of the challenges facing Mr Trump to unite his party and deliver his agenda’s centrepiece reforms, among them deep corporate tax cuts and a $US1 trillion infrastructure splurge.
Failure on the healthcare front could halt the progress of other bills until after the US summer, analysts said. “Investor sentiment seems to be turning against Trumponomics,” AxiTrader chief market strategist Greg McKenna said.
“If markets are going to unwind (that) positivity, the Aussie dollar’s rally is over.”
The local currency slipped to a one-week low of US76.64c late yesterday.
But Phillip Capital senior client adviser Michael Heffernan said the latest fears were “overblown” and market eruptions were inevitable even during benign periods.
“Take a look at share markets over the past year – the US was up 20 per cent, but we were only up 14 per cent. That tells me America has done pretty well since the Trump presidency,” Mr Heffernan said. The market drama overshadowed the positivity from Chinese premier Li Keqiang’s arrival in Australia overnight for a five-day visit aimed at solidifying and extending trade ties.
Premier Li’s tour is expected to demonstrate China’s increasing economic value to Australia as the Middle Kingdom looks to counterbalance Mr Trump’s protectionist stance.