Global equities retreat after Trump health-care law setback - 28.3.2017

Dow retreats eighth session in a row

US stocks closed lower on Monday after President Donald Trump withdrew his proposed health care law designed to replace Obamacare. The dollar weakened: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, fell 0.5% to 99.212. The Dow Jones average closed 0.2% lower at 20550.98, led by Chevron and Goldman Sachs shares. The blue chip index fell for an eighth session, its longest losing streak since August 2011. S&P 500 slipped 0.1% to 2341.59 with telecom and financial stocks leading the decliners while health care and materials stocks recorded biggest gains. The Nasdaq composite index closed 0.2% higher at 5840.37.

Stocks ended lower, though off session lows, and Treasury yields fell on Monday as investors reconsidered President Trump’s chances to push pro growth legislation through Congress after his failure to garner support for health care bill, his first legislative initiative. Expectations of stimulus measures such as tax cuts and increased infrastructure spending drove recent stock market rally, and concerns/signs that proclaimed policies will not materialize weigh on economy’s growth prospects setting off markets selloffs. Nо important data came out Monday. Chicago Fed President Charles Evans said that the central bank could raise rates four times this year if the economy “really takes off. Today at 14:30 CET February Advance Good Trade Balance and Wholesale Inventories will be released in US. The tentative outlook is positive for the dollar. At 15:00 CET S&P/Case-Shiller Home Price Index for January will come out, the outlook is neutral. At 16:00 CET March Consumer Confidence by Conference Board will be published, the outlook is positive for dollar. And at 18:50 Fed Chair Janet Yellen is due to speak.

SP 500

European stocks fall on Trump agenda doubts

European stocks closed lower on Monday as President Trump’s decision to call back his health care law spurred further concerns he will not be able to deliver on his promises of stimulus measures such as corporate tax cuts. The euro and British Pound rose against the dollar. The Stoxx Europe 600 index fell 0.4%. The DAX 30 lost 0.6% to close at 11996.07. France’s CAC 40 ended 0.1% lower and UK’s FTSE 100 fell 0.6% settling at 7293.50.

Concerns undermined the support for Trump reflation trade, hurting particularly bank stocks which had benefitted from the rally. Shares of UBS Group fell 0.6%, Lloyds Banking Group dropped 1.6% and Societe Generale shares lost 0.4%. In economic news business sentiment in Germany improved in March: the Ifo business climate index rose to 112.3 from 111.1 in February while no change was expected. No important data are expected in euro-zone today.

Asian markets mixed

Asian stock indices are mixed today after a global selloff following President Trump’s decision to pull the health care law from Congress vote late Friday. Nikkei ended 1.1% higher at 19202.87 with yen little changed against the dollar as investors bought high-yield stocks before they went ex-dividend. Chinese stocks are retreating third session in a row on tighter liquidity concerns after the central bank refrained from injecting short-term funds into the banking system: the Shanghai Composite Index is 0.4% lower while Hong Kong’s Hang Seng Index is up 0.6%. Australia’s All Ordinaries Index ended closed 1.2% higher with the Australian dollar extending losses against the dollar.

Oil prices edge up

Oil futures prices are recovering today but concerns about rising US shale oil output limit the gains as the number of active US oil rigs keeps rising. Prices fell on Monday after a Sunday statement by representatives of Kuwait, Algeria, Venezuela and non-OPEC nations Russia and Oman following a meeting to review the current levels of output cutback compliance stopped short of calling to extend cuts another six months. The compliance committee will meet again in late April to recommend to the cartel whether cuts need to be extended another six months. Later today the American Petroleum Institute industry group will report its estimate of the US crude stockpile for the last week. May Brent crude lost 0.1% to $50.75 a barrel on London’s ICE Futures exchange on Monday.