Friday 15:15 GMT
What you need to know
● Markets again cautious ahead of delayed US healthcare vote
● Dollar and Treasury yields mixed
● S&P 500 firm but European equities soft after positive Asian session
● Yen and gold struggle to make headway in sign of muted haven demand
● Oil prices choppy but Brent holds above $50
Dealers may be looking at their screens with a sense of déjà vu as they face another session waiting to see if US lawmakers will pass a new healthcare bill.
Markets suffered a wobble midweek — with Wall Street stocks having their worst session in several months — as investors began to fret that divisions within the US Republican party over Donald Trump’s plans to repeal Obamacare meant the president might struggle to get his other pro-business policies passed.
The healthcare vote was due to take place on Thursday but is now expected later on Friday, with Mr Trump issuing an ultimatum to House Republicans that they either pass the bill overhauling the nation’s healthcare system or reject it and he will move on to the rest of his legislative agenda.
Some analysts are worried that because the stock market had rallied sharply following Mr Trump’s election on hopes he can get economy-boosting tax cuts and infrastructure plans passed in Washington, any sense that such policies may be delayed will trigger a paring of bullish bets.
Others are more sanguine, arguing that even if healthcare cannot be sorted out quickly, any signs of progress in tax reform are more important to equity valuations and will soon reignite investors’ animal spirits.
Treasury secretary Steven Mnuchin said on Friday that the administration would try to get “comprehensive” tax reform done by Congress’ recess in August.
Kathleen Brooks, research director at City Index, said: “This healthcare vote doesn’t really matter in the long term, and its overall impact on the US economy is likely to be small. However, in the short term this is a major risk event for US markets, as it is considered a test of Trump’s ability to get legislation through Congress”.
US stocks are higher ahead of the Washington vote. In mid-morning New York trade, the S&P 500 is adding 8 points to 2,354, leaving the Wall Street barometer less than 2 per cent shy of the record closing high touched at the start of the month.
In Europe, the Stoxx 600 is down 0.2 per cent as financials struggle.
Earlier in Asia, Japan’s Topix, which had lost 2.1 per cent on Wednesday and stalled on Thursday, recovered 0.9 per cent.
Banks led Australia’s S&P/ASX 200 index to close 0.8 per cent higher as a number of lenders announced increases in certain mortgage rates in response to higher funding costs.
Hong Kong’s Hang Seng rose 0.1 per cent while China’s Shanghai Composite added 0.6 per cent to close at its best level of the year as gains for infrastructure stocks outweighed concerns about tightening liquidity in the financial system.
The dollar is mixed after its recent sell-off. The dollar index (DXY) fell on Wednesday to a six-week low of 99.55 amid heightened concerns about the Trump agenda, and is barely changed at 99.72 in the current session.
The euro is gaining 0.2 per cent to $1.0796 after surveys showed businesses across the eurozone at their most chipper in six years.
Sterling, which had been boosted this week by stronger than expected inflation and retail sales data, is seeing some profit-taking and slipping 0.3 per cent to $1.2479.
The yen is 0.2 per cent weaker at ¥111.12 after a survey of manufacturing activity fell in March to its lowest point this year. The Japanese currency on Thursday had strengthened for an eighth straight day — the longest winning streak since early 2011 as it was the main beneficiary of “haven” flows amid greenback selling.
Hopes that the Trump agenda will not be derailed and will help boost the US economy are making for an uncertain session in the bond market.
The 10-year US Treasury yield, which moves opposite to the bond price, is down 1 basis point to 2.41 per cent while the more monetary policy sensitive 2-year yield is adding 1bp to 1.26 per cent after some mixed economic data.
European paper is firmer, with German benchmark Bund yields easing 2bp to 0.41 per cent and UK gilts down 2bp to 1.21 per cent.
Gold, which has performed strongly in the first part of this week as the US dollar sold off, is up $2 at $1,247 an ounce.
Oil prices are striving to rally from a retreat that on Wednesday saw Brent crude hit a near four-month low of $49.71 a barrel amid worries that increasing US production was countering Opec output cuts.
Brent, the international benchmark, is flat at $50.56 a barrel and West Texas Intermediate, the main US contract, is up 0.1 per cent to $47.74.
Additional reporting by Peter Wells in Hong Kong
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