Asian markets sink with Wall Street on fears for Trump agenda

Wall Street's main indexes suffered their worst losses since Donald Trump's win, dragging Europe with them, as dealers fret about his agenda.
Wall Street's main indexes suffered their worst losses since Donald Trump's win, dragging Europe with them, as dealers fret about his agenda. PHOTO: REUTERS

HONG KONG (AFP, REUTERS) - Asian markets tumbled on Wednesday (March 22), tracking a US and European sell-off as the Trump-fuelled surge in equities went into reverse on fears about the prospects for the tycoon's plans to fire the world's top economy.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.4 per cent, its biggest intraday percentage fall since March 9. In the previous session, the index hit its highest level since June 2015.

Japanese stocks led regional losers, falling 2 per cent, as investors ignored data showing exports grew the most in more than two years in February. Australian shares tumbled 1.6 per cent while Singapore stocks 1.2 per cent.

The US dollar also struggled to recover against its major rivals and suffered fresh losses against high-yielding units as the euphoria that was injected into markets after the US president's November election fizzled.

After hitting multiple records this month, Wall Street's main indexes on Tuesday suffered their worst losses since Donald Trump's win, dragging Europe with them, as dealers fret about his agenda. The Dow Jones industrial average fell by about 238 points, a drop of more than 1 per cent, the broader S&P 500 was down 1.2 per cent while the Nasdaq tumbled 1.8 per cent.

The key cause for concern is Thursday's vote in Congress on the replacement for Obamacare, with many Republicans opposed to it in its current form.

Analysts say the inexperienced Trump is spending too much capital on the issue and if he is unable to push it through a Republican-controlled Capitol Hill, then his other plans - particularly infrastructure spending, tax cuts and deregulation - could be in trouble. Such promises were a key factor in the global markets rally.

The US president travelled up Pennsylvania Avenue on Tuesday to warn the party is could lose its majority if it fails to push through his bill.

"There is an ugly sea of red across global markets this morning as traders finally succumb to their fears that the positive benefits of Trumponomics are going to be delayed," Greg McKenna, chief market strategist at AxiTrader, said in a note.

"The impact of this is that the tax and infrastructure policy and implementation the market has been aching for looks set to be delayed. This is a sign that investors are losing faith in Trumponomics."

US stocks are also trading at the upper end of their historical valuation ranges with expectations of US tax cuts the major driver behind the 10-per cent surge in the S&P 500 since Trump's election and a subsequent rally in emerging markets since late December.

In a BofA Merrill Lynch survey conducted last week, 34 per cent of investors found equities to be most overvalued of all asset classes, the highest proportion in 17 years, with US stocks identified as the most expensive.

With expectations for economy-friendly measures petering, the dollar has taken a severe hit. It extended Tuesday's losses against the yen but held its ground against the pound and euro.

However, the South Korean won jumped 0.5 per cent, Australia's dollar rallied one per cent and the Indonesian rupiah was 0.2 per cent higher. The Mexican peso, which after Trump's win hit regular record lows, was also one per cent higher.