Market Snapshot – Global Stocks Slide, Dollar Tumbles on Trump Trade Doubts

Global Stocks Weaker as Trump Trade Collapses

European stock markets are down amid a global sell off in stocks as Trump’s failure to push through his healthcare reform bill has sparked doubts over his ability to pass his growth boosting plans going ahead.

In Asia, it was Japan that led the way down for stocks, as exporters were hit by a stronger Yen. In Europe, the DAX failed to get a lift from the stronger than expected Ifo reading and was down along with the FTSE which experienced headwinds with a stronger sterling. U.S. stock futures are also heading south amid the global rise in risk aversion.

GBP/USD Hits 8-Weeks High after Trump Withdraws Healthcare Bill, Article 50 in Focus

The pound is trading higher versus the dollar on the day so far, to hit 8-weeks high, and is up by 0.2% against the euro. In the news, the BoE announced that it will conduct a new “exploratory” stress test of the top seven UK banks, which will come as the two-year Brexit negotiation starts. Scenarios in the stress test will include a 33% drop in house prices and a spike in unemployment to 9.5%.

The main catalyst behind the pound strength is investors dissapointment of Trump’s healthcare failure and thee upcoming article 50 triggering.

GBP/USD is trading at 1.2609 +1.09.

US Dollar Falls after Healthcare Bill Failure

The Dollar index is trading lower on Monday after Trump’s healthcare bill failed to pass on last Friday. The index trades at its lowest level since the presidential elections.

The index rose to its 14-year high in January to trade near 104, however, as investors’ disappointment of Trump Trade, the Index dropped to trade at 98.73 -0.86.

Gold Hits One-Month High

Gold futures are trading higher shortly before the regular session opening. Traders are reacting to lower Treasury yields which are making the U.S. Dollar a less attractive investment.

The catalyst behind the move is President Trump’s inability to pass health care reform last week which is raising questions over this ability to deliver on his campaign pledges to reform tax laws and rebuild the country’s infrastructure.

Gold is trading at 1258.75, +0.79%, Silver follows to trade 1.37% higher.

Oil Prices Fall as OPEC Agree to Extend production cuts program

Crude Oil futures are trading lower as investors reacted to uncertainty over whether OPEC and non-OPEC members can agree to extend their current production cuts program.

Over the week-end, a committee of ministers comprised of members from OPEC and other oil producers agreed to look at prolonging the deal to reduce production. The key words are “look at”. Earlier, the committee recommended keeping the measure in place.

This change in the language may have caused the doubt that led to the early selling pressure. Traders are no refocusing on increasing U.S. production. Nonetheless, investors have to continue to watch for news about an extension. We could see a short-covering rally if the extension idea resurfaces.