LONDON, (MILLAT/APP/AFP) – European equities
churned lower Friday in tentative trade, after fragile gains in Asia, as investors looked to a key vote on US healthcare reform whose passage is seen as crucial to the future of
Donald Trump’s growth agenda.
The four-month rally in global stocks came to a juddering halt this week as
the new president struggled to garner enough support from his own Republican
party for a bill repealing Obamacare.
There are fears the bill’s failure would throw a spanner in the works for
his other big-ticket pledges on infrastructure spending, tax cuts and
deregulation — key drivers of the markets’ surge.
However, a vote on the reforms pencilled in for Thursday was put back a
day, with the White House saying it would definitely pass.
“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.
“However, Trump has indicated that should the healthcare reforms not pass,
he would simply move on to his other plans, such as cutting corporate taxes.”
The administration gave lawmakers an ultimatum Thursday, warning that if
the bill failed then Obamacare — which Republicans have vilified since its
inception seven years ago — would stay in place and Trump would move on to the rest of his agenda.
Greg McKenna, chief market strategist at CFD and FX provider AxiTrader,
added that the bill’s success would be a major positive for Trump, who is
struggling with a fractious Republican party, controversy over alleged links to Russia and record low popularity ratings.
And Toshihiko Matsuno, head of investment information at SMBC Friend
Securities, told AFP: “Even though the vote was delayed, the fact that it will take place Friday probably means the Republican plan will pass.”
However, McKenna added: “If it fails then the whole house of cards that’s
been built up since the election can come crashing down as traders and
investors wonder what the heck will happen to tax and infrastructure plans.”
Tokyo ended 0.9 percent higher, with exporters lifted by a weaker yen
against the dollar, having advanced on the US unit all week.
Hong Kong added 0.1 percent, Sydney was up 0.8 percent and Shanghai closed
0.6 percent higher.