European stock markets wobbled yesterday 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.
London’s FTSE 100 closed 0.05% down at 7,336.82 points, Frankfurt’s DAX 30 edged 0.2% up at 12,064.27 points, Paris’ CAC 40 slipped 0.2% down at 5,020.90 points, whereas the EURO STOXX 50 dropped 0.2% at 3,444.15 points at close.
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.
A vote on the reforms pencilled in for Thursday was put back a day, with the White House saying it would definitely pass.
Nevertheless, Trump turned up the pressure on lawmakers yesterday.
“After seven horrible years of ObamaCare (skyrocketing premiums & deductibles, bad healthcare), this is finally your chance for a great plan!,” Trump tweeted.
“Global equities are on the back foot into the weekend as investors eschew risk following a 24-hour delay by US lawmakers to vote on a repeal of Obamacare due to lack of Republican support,” said Mike van Dulken, analyst at Accendo Markets.
“Considered a key hurdle before moving forward with other bullish stimulus pledges (tax cuts, deregulation, infrastructure spending) the outcome could represent a turning point within the Trump rally, either reigniting it or possibly snuffing it out,” the expert said.
“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 on 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.”
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