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GLOBAL MARKETS-Stocks, dollar slip as Trump trade deflates

Published 2017-03-27, 11:40 a/m
© Reuters.  GLOBAL MARKETS-Stocks, dollar slip as Trump trade deflates
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* White House failure on healthcare raises worries over tax reform

* Dollar skids to 4-month low

* Safe havens such as gold, bonds, yen gain

* Oil dips towards $50 on doubts over output cut (Updates to U.S. trading; changes byline, dateline, pvs LONDON)

By Saqib Iqbal Ahmed

NEW YORK, March 27 (Reuters) - Stocks, the dollar and U.S. long-dated Treasury yields slipped on Monday as investors fretted that U.S. President Donald Trump's defeat over healthcare reform foreshadowed difficulties delivering other campaign promises, in particular fiscal stimulus.

Trump's failure to rally enough support from his own Republican party - which controls both houses of U.S. Congress - to repeal and replace Obamacare spurred a rush to safe-haven assets such as gold XAU= , the Japanese yen JPY= and the Swiss franc CHF= . all-country world equity index .MIWD00000PUS was down 0.16 as the fall in risk appetite dominated Asian and European stock markets.

The index was dragged down further after a lower open on Wall Street when main U.S. stock indexes hit their lowest levels in six weeks.

"The markets around the globe are falling as a rethinking of the 'Trump Trade' begins to focus on reality," Peter Cardillo, chief market economist at First Standard Financial in New York, wrote in a note.

"While we don't expect a full-blown correction to commence at this time, we do see rising negative sentiment replacing the 'Hope Trade.'"

The Dow Jones Industrial Average .DJI fell 66.4 points, or 0.32 percent, to 20,530.32, the S&P 500 .SPX lost 5.56 points, or 0.24 percent, to 2,338.42 and the Nasdaq Composite .IXIC dropped 6.13 points, or 0.11 percent, to 5,822.61.

European shares were hit by losses among miners and banks. Europe's broad FTSEurofirst 300 index .FTEU3 dropped 0.5 percent at 1,477.12.

The U.S. dollar fell to its lowest since November against a basket of currencies as investors lost confidence in prospects for a U.S. fiscal spending boost under the Trump administration. dollar index .DXY had risen to a 14-year high near 104.00 in early January when expectations for inflation-boosting stimulus under the Trump presidency were at their peak. On Monday, the index slipped below 99.0, its lowest since Nov. 11, two days after the results of the presidential vote.

The weaker dollar helped boost gold. Spot gold XAU= was up 0.95 percent at $1,255.70 an ounce, after hitting a 1-month high of $1,261.03 an ounce, earlier in the session.

U.S. long-dated Treasury yields fell to one-month lows on Monday, knocked by growing uncertainty about whether the Trump administration could deliver on its campaign promise to bolster the economy. 30-year bond prices rose 15/32 US30YT=RR , yielding 2.976 percent. Earlier, yields slid to 2.96 percent, their lowest since Feb. 28.

"This is just follow-through from Friday. There is disappointment over the inability to pass the reform of Obamacare," said Gennadiy Goldberg, interest rates strategist at TD Securities in New York.

"There was also some concern over the time line over the tax reform," he added.

Meanwhile, oil fell further towards $50 a barrel, pressured by uncertainty over whether an OPEC-led production cut will be extended beyond June in an effort to counter a glut of crude. crude LCOc1 was last down 14 cents, or 0.28 percent, at $50.66 a barrel. U.S. crude CLc1 was down 33 cents, or 0.69 percent, at $47.64 per barrel.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates in 2017

http://tmsnrt.rs/2egbfVh Global assets in 2017

http://reut.rs/1WAiOSC Global currencies vs. dollar

http://tmsnrt.rs/2egbfVh Global bonds dashboard

http://tmsnrt.rs/2fPTds0

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