Futures hit six-week low on failed healthcare bill

Against the Singapore dollar, the United States dollar slipped 0.2 per cent to S$1.3960.

For now, Asian stocks are down in sympathy with USA stock futures.

Global benchmark crude LCOc1 rose 0.4 percent to $50.95.

Japan's Topix lost 0.9 per cent and Australia's S&P/ASX 200 Index retreated 0.5 per cent, led by a slide in materials producers.

The U.S. dollar took a spill in early Asian trade on Monday as investors in the region fretted about the chances of U.S. fiscal stimulus following the defeat of President Donald Trump's healthcare package.

The Philippine index fell 0.4 per cent, as financial stocks weighed.

Following the defeat on US healthcare legislation on Friday, the White House warned rebellious conservative lawmakers on Sunday that they should get behind Trump's agenda or he may bypass them on future legislative fights, including tax reform.

The euro initially hopped to a near four-month peak at $1.0846 and was last up 0.37 percent at $1.0837.

"Concerns towards the Trump administration have been reignited after his healthcare legislation setback".

The withdrawal of the Republican health care bill was blamed for sharp drops Monday morning in a number of leading USA economic indicators, including the dollar's drop to almost a two-month low. "This is resulting in a bout of risk aversion weighing on the dollar", said Shin Kadota, senior strategist at Barclays in Tokyo.

"We think linking this particularly hard legislative undertaking with the rest of the Trump is flawed", he argued.

While it understands why the dollar has fallen as markets lose faith in the ability of the Trump administration to secure support for substantial tax reform and infrastructure spending, strategists at the NAB are not ready to read the eulogy on the United States dollar rally just yet.

Still, the drop in futures appeared to be kept in check on Trump's comment to turn his attention to getting "big tax cuts" through Congress.

"A pullback in US equities resulting from the health-care-bill failure would give Asian markets a good reason to take profit after three months of non-stop rallying", said Margaret Yang Yan, a market analyst at CMC Markets in Singapore.

"It clearly highlights that divides remain, and it means that the policy paralysis that was often evident over recent years could linger", wrote analysts at ANZ in a note.

Against the sagging dollar, the pound was up 1.1 per cent at US$1.2515, reversing the previous day's losses when the currency fell as investors braced for Britain beginning the formal process of leaving the European Union this week.

DBS chief investment officer Lim Say Boon said: "Analysts say the share sell-off is unsurprising given the intensity of the rally since USA election, which saw the S&P 500 surging 9.6 per cent, Nasdaq jumping 12.2 per cent and the STI gaining 12.1 per cent".

  • Zachary Reyes