Asia hit by fears over Trump agenda

Asian markets turned negative yesterday as Republicans’ struggle to push through controversial health care legislation fuels concerns about the chances of Donald Trump passing his much-vaunted economic agenda. Global markets soared in the months after the tycoon’s November election victory as traders bet his plans to slash taxes and red tape while ramping up infrastructure spending would fire the world’s top economy.

But his failure to pass an overhaul of Obamacare-a key campaign promise despite his party controlling Congress has led many to question his ability to deliver his major promises. The president’s lack of detail on his economic plans led the International Monetary Fund to cut its 2017 and 2018 US growth projections. “US lawmakers have withdrawn the Senate Health Care Bill till after the summer recess. This is a blow to the Trump agenda because it makes tax cuts all the more difficult,” said Greg McKenna, chief market strategist at AxiTrader.

All three main indexes on Wall Street ended sharply lower and the losses filtered through to Asia, with the technology sector taking a hit. Big-name giants including Seoullisted Samsung, Japan’s Sony and Tencent in Hong Kong were all lower. Tokyo’s Nikkei ended 0.5 percent lower, while Hong Kong lost 0.6 percent, Singapore gave up 0.1 percent and Seoul dropped 0.4 percent. Wellington, Taipei and Manila also retreated but Sydney rose 0.7 percent. Adding to the selling were concerns about another wave of global cyberattacks reminiscent of May’s WannaCry virus that crippled organisations and companies in 150 countries.

Euro rallies

On currency markets the euro extended gains against the dollar after European Central Bank boss Mario Draghi said the EU was enjoying a newfound confidence that could unlock demand and investment. And while he cautioned against winding down the bank’s easy money policy, analysts said the Italian was more hawkish than expected.

Stephen Innes, senior trader at OANDA, said in a note: “An emphatically hawkish Mario Draghi suggests the ECB policy is on track while all but declaring victory over the eurozone inflation conundrum. Apparently, the ECB has taken a giant leap towards ending (its) ultra-loose monetary policy.”

The euro surged more than one percent above $1.13 and yesterday it pushed to highs not seen since May last year. The single currency was also up about 1.4 percent against the yen at levels not seen since early 2016.

The greenback was also down against the pound on concerns about Trump’s agenda. It held gains above 112 yen after top Federal Reserve officials indicated interest rates would rise further this year. Oil prices eased slightly after jumping around two percent Tuesday as the commodity bounces back from sharp losses that saw it hit a 10-month low. In early European trade London fell 0.3 percent, Paris lost 0.5 percent and Frankfurt shed 0.7 percent.

“Wednesday’s trading continued to be driven by Tuesday’s news, with little to challenge either Draghi’s... comments or the latest US healthcare reform stumble for market dominance,” said Connor Campbell, analyst at Spreadex trading group. “The euro had already managed a strong Tuesday performance after Draghi subtly hinted at a slight shift in the ECB’s approach to stimulus. Yet the currency soon received a second wind, hitting a 12-month high against the dollar following news that the Republicans had pushed back the Senate healthcare vote due to intra-party opposition,” he added.

European stock markets were lower in Wednesday trading, mirroring falls across Asia and on Wall Street overnight. Draghi on Tuesday said the EU was enjoying a newfound confidence that could unlock demand and investment. While he cautioned against winding down the bank’s easy money policy, analysts said the Italian was more hawkish than expected. The European single currency was also up against the yen at levels not seen since April 2016, while the dollar was lower also on concerns about Trump’s agenda. —AFP