Stocks stumble on US policy woes; Trumpflation trades reel

US stock futures and the dollar fell on Monday while Asian markets struggled as President Donald J. Trump’s failure on healthcare reform raised questions about his ability to push through tax cuts and fiscal spending to help boost the economy. Mr. Trump’s inability to get enough support from his own Republican party to “repeal and replace” the Obamacare health insurance reforms also spurred a rush to safety assets such as gold and the Japanese yen.

HONG KONG — US stock futures and the dollar fell on Monday while Asian markets struggled as President Donald J. Trump’s failure on health care reform raised questions about his ability to push through tax cuts and fiscal spending to help boost the economy.

Mr. Trump’s inability to get enough support from his own Republican party to “repeal and replace” the Obamacare health insurance reforms — a major campaign promise — also spurred a rush to safety assets such as gold and the Japanese yen

US stock index futures fell 0.70% to a six-week low in heavy volume, suggesting a weaker start on Wall Street later in the day.

So- called “Trumpflation trades” — betting on an extended recovery in the US and global economies and related assets such as commodities — came under heavy selling pressure.

“Markets have had a good run recently and this is a good opportunity for profit taking across counters,” said Alex Wong, a fund manager at Ample Capital Ltd. in Hong Kong, with about $130 million under management.

But Mr. Wong expects the selloff to be limited as cashed-up investors waited on the sidelines.

MSCI’s broadest index of AsiaPacific shares outside Japan was down 0.10% after posting its first weekly decline last week in three weeks.

Japan’s Nikkei fell 1.50% as the yen rebounded in the face of renewed US dollar weakness.

ASIA WORRIES

Growing US policy uncertainty has also raised concerns that a recent pick-up in global business and consumer sentiment — particularly in Asia — would start to fade.

In terms of relative valuations, US stocks are trading well above their historical averages while Asia stocks are still broadly in line despite a recent bounce.

“Any big pull back in markets would be an opportunity for long term investment in a region where potential is still intact,” said Nicholas Yeo, head of China/ Hong Kong equities at Aberdeen Asset Management in Hong Kong, part of a team that manages $374 billion in assets as of end-December 2016. —