Hong Kong: Asian markets fell on Monday and the dollar struggled on fears the collapse of Donald Trump’s repeal of Obamacare could mean he will struggle to push through his promised tax-cut and infrastructure spending policies. In a severe early blow to the new administration, the healthcare reform was pulled on Friday as it failed to garner enough support among Trump’s Republican party, who have a majority in both Houses of Congress.
While the tycoon said he would now move on to tax reform, the failure of the bill — which was seen as a litmus test for his ability to push through his economy-boosting agenda — has led to concern about future policies.
Global markets had surged since November on hopes the president’s pledges to overhaul the tax code, ramp up spending and deregulate markets would fire the already healthy economy.
“This was the first major attempt by the administration to reform the government and its miserable failure exposes the limits of President Trump,” Rodrigo Catril, a currency strategist at National Australia Bank in Sydney, told Bloomberg News.
Tokyo’s Nikkei index led losers, shedding 1.4 per cent as the dollar retreated against the yen, with analysts predicting it could fall as low as 107 yen. Toshiba lost 2.1 per cent on a report its troubled US nuclear unit is likely to start bankruptcy proceedings this week.
Sydney slipped 0.1 per cent and Seoul gave up 0.6 per cent. Singapore was 0.5 per cent lower.
Shanghai closed 0.1 per cent off. Hong Kong stocks fell as fresh measures to curb China’s heated property market weighed on shares of developers, offsetting data showing strong profit growth for industrial companies early in the year.
The Hang Seng index fell 0.7 per cent to 24,193.70 points, while the China Enterprises Index lost 1.1 per cent to 10,362.02. An index tracking mainland developers tumbled over 4 per cent, led by industry heavyweight Vanke, after China restricted individual purchases of commercial properties in Beijing in the latest effort to curb real estate speculation. Vanke fell nearly 5 per cent. Though it reported on Sunday that its 2016 core profit rose 19 per cent, thanks to record sales, the number fell short of market expectations.
Over a dozen cities in China have tightened controls on property purchases so far this month amid signs that home prices are picking up again in spite of a slew of earlier cooling measures.
Investors shrugged off fresh signs of China’s economic recovery.
Profits of Chinese industrial firms surged 31.5 per cent in the first two months of 2017 from a year earlier, data showed on Monday. A healthy pick-up in earnings had already been expected following sharp rises in producer prices in recent months, and compared with a weak performance in early 2016.
Moreover, many analysts fear the recovery, which is being mainly driven by the property sector and government infrastructure spending, is unsustainable.
In early European trade London slipped 0.8 per cent while Paris and Frankfurt each sank 0.9 per cent.
Greg McKenna, Chief Market Strategist at AxiTrader, noted: “If healthcare was complex then so too will the tax be with the many moving parts and competing interests.”
On currency markets the greenback fell against its major peers and most high-yielding units, with the South Korean won up 0.9 per cent, Malaysia’s ringgit 0.3 per cent higher and the Indonesian rupiah up 0.2 per cent.
The euro was 0.45 per cent higher at $1.0847 following a rise to $1.0849, its strongest early December.
US Treasury yields were trading near one-month lows with 10-year bonds closing in on 2.37 per cent, its lowest levels since February 28. — AFP
Oman Observer is now on the WhatsApp channel. Click here
