Monday, 27 March 2017
Trump’s healthcare bill dead, stock rally too?
Boom… Trump’s healthcare bill is over. Or at least for now. The vote was pulled after President Donald Trump understood on Friday not enough Republicans were going to support the project.
Markets reacted quickly on the news, with US stock futures posting strong losses in pre-session trading on Monday. The Dow Jones Industrial Average futures were down by more than 165 points in early hours, while S&P 500 futures dipped nearly one percent, just like Nasdaq 100 futures came down by more than 50 points.
Asian stock indexes also moved lower on Trump’s healthcare failure, with Japan’s Nikkei 225 index ending down by 1.44%. The USDJPY felt nearly one percent in Asian hours, posting one of its worst days since the November election. In commodity markets, gold futures rose due to growing uncertainty to trade around $1,257.90 per ounce.
The US dollar index (USDX), which tracks the greenback against a basket of six major rivals, came down by 0.3 percent to 99.29. The index had reached a 14-year peak of 104.00 in January, over expectations that Trump will bring solid economic growth and higher rates.
Market analysts have been warning for quite sometime that this event will be crucial for the Trump administration as investors treated the healthcare bill as a signal of whether the president is able to coordinate efforts with Congress to promote his agenda or not.
US equity markets have been rising steadily since November 2016 over speculation of higher fiscal spending, tax reform and deregulation in several industries.
The American Health Care Act (AHCA) was Trump’s first attempt to pass a major bill in Congress. Troubles within its own party left him empty handed and on the verge of even bigger problems, such as lack of confidence from investors.
So… what now?
Wall Street is a drama queen. But that doesn’t mean you should be too. On Friday, House Speaker Paul Ryan recognized it was a disappointing day for the Trump administration but reassured that the tax reform is still on the table and the healthcare downturn won’t stop it.
"Yes, this does make tax reform more difficult. But it does not, in any way, make it impossible. We will proceed with tax reform," Ryan said in a late-night conference.
It’s probably a good time to revise all what happened until now and see what the near future has to offer, possibly a lot. So don’t be sad, the Trump rally might not over after all.