1. News
March 22, 2017

Global market confidence drops spelling trouble ahead as Trump fails to deliver

Stock markets suffered their worst falls since the election of US president Donald Trump, amid concerns he won’t be able to deliver on his pro-growth policy pledges.

The Trump administration’s struggle to push through a new healthcare bill to replace Obamacare as well as no sign of the much-anticipated tax cuts are making investors less bullish.

“The market is starting to get a little fed up with the lack of progress in healthcare because everything else is being put on the back burner,” said RJ Grant, head of trading at Keefe, Bruyette & Woods, an investment banking firm in New York.

Banks suffered the worst casualties, with Bank of America shares falling by 5.77 percent and Goldman Sachs losing 3.72 percent at market close yesterday.

After 109 trading days without a drop of 1 per cent or more, the benchmark S&P 500 index tumbled 1.2 percent. The Dow Jones Industrial Average and Nasdaq indices suffered their biggest falls of the year.

The Russell 200 index of smaller companies also fell, closing down 2.7 percent, its worst day since September.

“After two months in office, markets want proof not just promises, fearful that the healthcare reform Trump is using to put a stamp on his presidency could delay the tax cuts and infrastructure spending markets desire so much more,” said Mike van Dulken, head of research at Accendo Markets.

Although US markets led the declines, Europe and Asia soon followed.

The FTSE 100 was down 72 points this morning,  the lowest in two weeks, while the French Cac 40 and the German Dax each fell around 0.8 percent.

In Asia, the MSCI Asia Pacific Index fell 1.4 percent overnight, Japan’s Topix dropped 2.1 percent, hitting a three-week low and Hong Kong’s Hang Seng Index closed 1.2 percent lower, its biggest fall in 2017.

“A reverse in US equity indices has proven contagious to all regions and all markets,” said Kit Juckes, a macro strategist at Société Générale. “More than half of the Trump feelgood factor feels tarnished now.”

Tomorrow, Republicans will consider whether or not to back Trump’s healthcare reforms.

If he wins the first major legislative battle of his presidency, perhaps markets will show signs of recovery, but if not, things could go from bad to worse.