HONG KONG, China (AFP) — The dollar sank with most Asian equities Tuesday as two Republican senators rejected their party’s bill repealing Obamacare, effectively killing it and throwing Donald Trump’s economic agenda into doubt.
Global markets soared for months after Trump’s November election on hopes his big-spending, tax-cutting policies would fire the world’s top economy.
But an ongoing crisis surrounding the White House has hobbled the tycoon’s presidency, with opposition to his controversial health care reforms — crucial to freeing up cash — raising questions about his ability to push other big-ticket measures.
While Republicans have 52 of the Senate’s 100 seats, the opposition to the bill from two members last week was followed Monday by two more. Their decision means the bill has no chance of even getting a vote unless Senate Majority Leader Mitch McConnell makes significant changes to woo sceptics.
Stephen Innes, senior trader at OANDA, said in a commentary: “This headline has massive implications to amend Obamacare and brings a huge element of doubt over the tax reform.
“Equity futures are wobbling, the dollar is selling off. Gold has picked up its allure again given the heightened political risk landscape.”
Tokyo’s Nikkei ended the morning session 0.6 percent lower, with the yen strengthening against the dollar, dragging on Japanese exporters. The market was closed for a holiday Monday.
Eyes on Draghi
Shanghai shed 0.1 percent, Sydney fell one percent while Seoul and Singapore were each 0.1 percent off.
Wellington, Taipei and Jakarta all slipped.
However, Hong Kong extended gains into a seventh day, rising 0.2 percent to sit at a two-year high.
On currency markets the dollar came under pressure as investors think twice about the chances of the Federal Reserve lifting interest rates again as Trump struggles and inflation remains subdued.
Recent remarks from Fed boss Janet Yellen indicating the bank will concentrate on prices have tempered rate expectations in recent weeks.
Among the biggest winners was the euro, which broke above the $1.15 mark for the first time since last June, with eyes on the European Central Bank’s policy meeting later on Thursday.
While ECB chief Mario Draghi is not expected to announce any tightening measures yet, there is speculation it will begin winding in its stimulus programme as the eurozone economy improves.
“The current market discussion suggests September ECB for even (central bankers’ US gathering at) Jackson Hole will be the platform (to) announce the … easing,” Innes added.
“The market believes there is no coincidence in Draghi’s appearance at Jackson Hole,” he added.
Key figures around 0230 GMT
Tokyo – Nikkei 225: DOWN 0.6 percent at 19,991.86 (break)
Hong Kong – Hang Seng: UP 0.2 percent at 26,515.52
Shanghai – Composite: DOWN 0.1 percent at 3,174.51
Euro/dollar: UP at $1.1523 from $1.1479 at 2100 GMT
Pound/dollar: UP at $1.3076 from $1.3057
Dollar/yen: DOWN at 112.26 yen from 112.61
Oil – West Texas Intermediate: UP eight cents at $46.10 per barrel
Oil – Brent North Sea: UP eight cents at $48.50
New York – DOW: FLAT at 21,629.72 (close)
London – FTSE 100: UP 0.4 percent at 7,404.13 (close)
© Agence France-Presse