US, global stocks mostly down as health bill failure taken in stride

PUBLISHED : Saturday, 25 March, 2017, 7:57am
UPDATED : Saturday, 25 March, 2017, 8:02am

US shares pared losses to end slightly lower on Friday after Republicans pulled their bill to overhaul the US health care system due to a shortage of votes, dealing a blow to US President Donald Trump, while European shares fell ahead of the decision.

The benchmark US S&P 500 stock index ended a touch lower after falling as much as 0.4 per cent, before Trump and the House Republican leadership said the bill to dismantle Obamacare had been pulled.

Trump, Republicans withdraw health care bill in first major defeat

European stocks slipped as caution prevailed ahead of the decision, with the FTSEurofirst 300 index of top European shares falling about 0.5 per cent for the week.

But many analysts and investors have seen a failure of the bill as a catalyst to bring forward action on pro-growth policies such as tax reform, deregulation and infrastructure spending.

“The market is taking it as a positive that they are not pursuing something that looked like it was hitting a brick wall, and that means it’s more likely they can move on to other issues the market would like such as deregulation and lower taxes,” said Margaret Patel, senior portfolio manager at Wells Fargo Asset Management in Boston.

MSCI’s all-country world equity index was last up 0.24 point, or 0.05 per cent, at 447.72.

The Dow Jones Industrial Average closed down 59.86 points, or 0.29 per cent, at 20,596.72. The S&P 500 closed down 1.98 points, or 0.08 per cent, at 2,343.98. The Nasdaq Composite ended 11.05 points higher, or 0.19 per cent, at 5,828.74.

Europe’s broad FTSEurofirst 300 index ended off 0.16 per cent at 1,484.54.

The US dollar index, which measures the greenback against a basket of six major rivals, hit a seven-week low of 99.527 before the health care decision but pared losses after the announcement and was last marginally higher at 99.765.

“If this stronger dollar has legs, it depends on the next step,” said Paresh Upadhyaya, director of currency strategy at Pioneer Investments in Boston. “If there is a pivot to taxes from health care, the market has to see the plan.”

Safe-haven assets such as gold, US Treasuries and the yen lost some shine after the decision. Spot gold prices pared gains to last trade little changed at US$1,245.37 an ounce after hitting a more than three-week high on Thursday of US$1,253.12.

The dollar was last up 0.3 per cent against the yen at 111.25 yen after touching a four-month low of 110.64 yen before the decision.

Benchmark 10-year US Treasuries prices turned flat after the decision, with their yields last at 2.418 per cent after hitting a session low of 2.393 per cent earlier.

Oil rose modestly in a spate of late-day activity, but fell on the week as concerns persisted over an excess of crude.

Brent crude settled up 24 cents, or 0.47 per cent, at US$50.80 a barrel. US crude settled up 27 cents, or 0.57 per cent, at $47.97.