Wall St, dollar pare losses after healthcare overhaul bill pulled
Hong Kong shares tick up as investors await earnings
NEW YORK, March 25, (RTRS): US shares pared losses to end slightly lower on Friday after Republicans pulled their bill to overhaul the US healthcare system due to a shortage of votes, dealing a blow to US President Donald Trump, while European shares fell ahead of the decision.
The benchmark US S&P 500 stock index ended a touch lower after falling as much as 0.4 percent earlier, before a House Republican leadership aide said the bill to dismantle Obamacare had been pulled by US House Republican leadership. Traders were on tenterhooks during most of the session as they awaited the outcome of the vote.
European stocks slipped as caution prevailed ahead of the decision, with the FTSEurofirst 300 index of top European shares falling about 0.5 percent for the week.
But many analysts and investors have seen a failure of the bill as a catalyst to bring forward action on pro-growth policies such as tax reform, deregulation and infrastructure spending.
“The market is taking it as a positive that they are not pursuing something that looked like it was hitting a brick wall, and that means it’s more likely they can move on to other issues the market would like such as deregulation and lower taxes,” said Margaret Patel, senior portfolio manager at Wells Fargo Asset Management in Boston. MSCI’s all-country world equity index was last up 0.24 point, or 0.05 percent, at 447.72.
The Dow Jones Industrial Average closed down 59.86 points, or 0.29 percent, at 20,596.72. The S&P 500 closed down 1.98 points, or 0.08 percent, at 2,343.98. The Nasdaq Composite ended 11.05 points higher, or 0.19 percent, at 5,828.74.
Europe’s broad FTSEurofirst 300 index closed down 0.16 percent at 1,484.54.
The US dollar index, which measures the greenback against a basket of six major rivals, hit a seven-week low of 99.527 before the healthcare decision but pared losses after the announcement and was last marginally higher at 99.765.
“If this stronger dollar has legs, it depends on the next step,” said Paresh Upadhyaya, director of currency strategy at Pioneer Investments in Boston. “If there is a pivot to taxes from healthcare, the market has to see the plan.”
Decision
The dollar was last up 0.3 percent against the yen at 111.25 yen after touching a four-month low of 110.64 yen before the decision.
Benchmark 10-year US Treasuries prices turned flat after the decision, with their yields last at 2.418 percent after hitting a session low of 2.393 percent earlier.
A dramatic session on Wall Street ended with stocks slightly lower on Friday as they pared losses in late-afternoon trading after Republicans pulled their bill to overhaul the US healthcare system.
The benchmark S&P 500 shot up briefly into positive territory before falling back into the red as Republicans pulled the legislation due to a shortage of votes just before the markets closed, leaving investors to assess how the healthcare bill’s failure would affect President Donald Trump’s broader economic agenda. Investors had worried earlier this week that the failure of the bill, which would have dismantled the law known as Obamacare, would prove an ominous sign for Trump’s ability to push through his economic agenda, including tax reform. But some analysts and investors have seen a failure of the bill as a catalyst to bring forward action on tax reform in particular.
“Now that they’ve taken the healthcare issue off the table, I think the market is more optimistic that they can do other things that are more doable that are not so complicated, such as regulatory reform and lowering taxes,” said Margaret Patel, senior portfolio manager at Wells Fargo Asset Management in Boston.
The back-and-forth over the bill this week has led to some of the most volatile trading Wall Street has seen since Trump’s election in November. For the week, the S&P 500 fell 1.4 percent, its worst weekly decline of the year.
The S&P 500 has climbed 9.6 percent since Trump’s election, notching a series of record highs along the way. But the rally has stalled recently, and Tuesday’s 1.2 percent drop set off concerns about the beginning of a larger fall.
Shares of hospital operators finished sharply higher, with Tenet Healthcare up 7.4 percent. The potential dismantling of Obamacare has pressured hospital stocks over concerns the benefits the companies gained from coverage expansion would diminish.
Gainer
In corporate news, Micron Technology jumped 7.4 percent after the chipmaker’s revenue and profit forecasts beat expectations. The stock was the biggest percentage gainer on the S&P and helped lift the Nasdaq.
GameStop tumbled 13.6 percent after the company’s profit projection fell below estimates. Advancing issues outnumbered declining ones on the NYSE by a 1.07-to-1 ratio; on Nasdaq, a 1.30to-1 ratio favored advancers.
The S&P 500 posted 19 new 52-week highs and three new lows; the Nasdaq Composite recorded 58 new highs and 40 new lows.
About 6.2 billion shares changed hands in US exchanges, below the 7.1 billion daily average over the last 20 sessions. The dollar pulled back from near a four-month low against the Japanese yen on Friday, and was on pace to snap an eight-day losing streak against the safehaven currency, after Republicans killed their bill to overhaul the US healthcare system.
With a risk-averse mood across markets, the greenback has slipped about 1.3 percent against the yen this week. On Friday, it was up 0.31 percent at 111.27 yen. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.02 percent at 99.739, after falling to a seven-week low of 99.527, earlier in the session.
The euro gained 0.19 percent, at $1.0800, close to a seven-week peak of $1.0825 touched on Wednesday on the view that the European Central Bank is heading toward tightening monetary policy as growth and inflation accelerates across the eurozone.
Sterling fell against the dollar and euro from the previous session’s onemonth highs, as investors braced for Britain to begin next week the formal process of leaving the European Union.
Hong Kong stocks eked out marginal gains on Friday, with investors awaiting corporate earnings and a vote on a new US healthcare bill seen as Trump’s first policy test.
The benchmark Hang Seng index added 0.1 percent, to 24,358.27 points at the close. The main index has gained 0.2 percent this week.
The Hong Kong China Enterprises Index lost 0.1 percent, to 10,477.81 points.
Analysts worry that Trump’s failure to pass the healthcare bill would cast doubt on his ability to deliver on the promises of tax cuts and infrastructure spending.
“We all have the same assumption. If he meets some obstacle here, he would also meet obstacles elsewhere,” said Alex Wong, a director at Ample Finance Group. “There are concerns in the Hong Kong market, but not big enough to be overly anxious.” Wong noted investor appetite for risky assets remains solid, but wild swings may be seen in some stocks as earning reports start to trickle in. Most sectors in Hong Kong lost ground, with resource stocks leading the declines.
Shares in China Huishan Dairy Holdings plunged 85 percent on Friday, before trade was halted. It was not immediately clear what triggered the slide.
In December, US-based short-seller Muddy Waters questioned the firm’s profits and said it had inflated spending on its cattle farms to artificially raise capital expenditure figures.