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Financial Markets Stable Ahead of Major U.S. Healthcare Vote

By:
James Hyerczyk
Updated: Mar 23, 2017, 06:33 UTC

U.S. financial markets are stable early Thursday as investors are reacting to news that the chances of getting an Obamacare replacement bill passed by the

U.S. Markets

U.S. financial markets are stable early Thursday as investors are reacting to news that the chances of getting an Obamacare replacement bill passed by the House of Representatives improved late Wednesday. Reportedly, the White House is offering a late-minute change to the plan by dropping a set of minimum benefits health insurers are now required to provide customers.

According to the House’s conservative Freedom Caucus, this issue has been seen as a major concern because it is being blamed as the main reason for the sky-rocketing cost of insurance. Essentially, the Republicans have offered to eliminate “essential health benefits”.

If this news pleases the opposition then resistance to passage of the House Republican healthcare reform bill will fall apart, and the bill will garner the necessary votes for passage.

Crude Oil

Oil prices continued to decline on Wednesday, hitting a four-month low, after new data showed U.S. stockpiles rose faster than expected. According to the U.S. Energy Information Administration (EIA), U.S. inventories climbed by almost 5 million barrels to 533.1 million the week-ending March 20, well above the forecast for a 2.8 million barrel increase.

Contributing to the increased inventory was an increase in U.S. oil production, together with a rise in imports from Canada.

U.S. May West Texas Intermediate Crude Oil closed at $48.04, down $0.20 or -0.41% and international June Brent Crude Oil finished at $50.87, down $0.32 or -0.63%.

Gold

Gold futures rose to a three-week high on Wednesday on uncertainty over the economic policies of U.S. President Donald Trump. The lack of economic policy details from the Trump administration helped increase gold’s attraction as a safe-haven investment.

The price action suggests that gold is garnering strong support as a safe-haven investment. As equity investors take money off the table due to the lack of progress in President Trump’s legislative agenda, it is flowing into the safe-haven gold market.

Gold is up nearly $50 from its low on March 15, which corresponded with the Fed’s decision to gradually increase rate hikes as many as three times in 2017 rather than the highly speculated four times that had been factored into gold prices at the time.

Forex

The primary driven of the action in the Forex markets at this time is the weakness in the U.S. Dollar which fell to a four-month low against the safe haven Japanese Yen on Wednesday. The general theme in the markets is “risk-off” as many investors reconsider the “Trumpflation” trade that drove the Greenback to a multi-year high and stocks to record highs.

U.S. Treasury yields continue to decline in the wake of the Trump administration’s inability to start the ball rolling on tax reform, fiscal spending and deregulation. Investors are starting to realize that Trump is not going to be able to deliver on his promises and are taking profits on speculative bets in certain financial arenas that they consider to be overvalued.

 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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