World equities wobble as Trump health bill vote canceled

World equity markets wobbled Friday, with US stocks finishing mostly lower, as investors monitored a swirl of negotiations surrounding President Donald Trump’s health care replacement bill, before the surprise decision to cancel the vote in Congress.
The fate of the repeal of former President Barack Obama’s signature legislation has been seen by the US and international investors as a critical early test for the Trump administration’s capacity to push its agenda through Washington.
Expectations for pro-growth policies from Washington have fueled a worldwide stock rally since Trump’s election win.
The health care replacement was heading for almost certain defeat before congressional leaders canceled the vote at Trump’s request just before it was to take place Friday afternoon, despite pressure from Trump in person Thursday and in tweets Friday morning to pass the bill.
Stocks hit session lows shortly before the decision to pull the plug on the bill, but the market regained some ground after the news became public that the vote would not happen.
The late rebound, which was not enough to lift the Dow and the S&P 500 into positive territory, appeared to stem from the idea that canceling the vote was a better outcome than an actual defeat.
“It is a setback but the market is telling you it is a minor setback,” said JJ Kinahan, chief market strategist at TD Ameritrade.
Kinahan said investors had seen the health care vote as an important source of momentum for the Trump agenda, with the most important item being a tax cut plan.
“The entire rally has been pretty much about the tax bill,” he said.
Briefing.com said, “The president made it clear that, if the American Health Care Act (AHCA) did not make it out of the House on Friday, his administration would be moving on to tax reform.”
“That notion is somewhat comforting to investors, but since health care reform went nowhere, the reliability of such a promise will certainly be put into question.”
While the Dow and S&P 500 both ended down, the NASDAQ scraped a 0.2 percent gain in part due to a rally in semiconductor shares following strong earnings from Micron Technology. Bourses in London and Paris declined, while Frankfurt finished modestly higher and the Nikkei in Japan rose on a cheaper yen.
Analysts overseas also expressed concerns about the implications of a Trump setback on health. “The threat of a rejection in Congress for Trump’s Obamacare replacement has brought about significant doubts over his ability to pass his corporate tax cut this week,” noted IG analyst Joshua Mahony in London.

Source: Arab News