| LONDON, March 28
LONDON, March 28 Stocks recovered while the
dollar rose off four-month lows on Tuesday as anxiety over
Donald Trump's setback on healthcare reform gave way to
tentative hopes for the U.S. president's planned stimulus
Hopes that the Trump administration will now prioritize tax
reforms coupled with still-robust economic data and corporate
earnings forecasts spurred some investors to look past creeping
doubts about Trump’s ability to deliver on campaign promises.
Europe's STOXX 600 rose 0.4 percent helped by
financials and pharmaceutical stocks.
The dollar index against a basket of major currencies edged
up 0.1 percent to 99.252, after plumbing a trough of
98.858 overnight, its lowest level since Nov. 11.
"Risky asset markets have rebounded from yesterday’s opening
low, supporting our view of the current market setback as a risk
pause and not a turning point towards generally lower risk
valuations," analysts at Morgan Stanley said in a note to
The Trump administration's failure to undo Obamacare raised
concern among investors that planned tax reforms face a rockier
road though Congress. The White House said it would take the
lead in crafting legislation to overhaul the tax code, adding:
"We're going to work with Congress on this."
Morgan Stanley said that given some of the savings that were
to come from replacing Obamacare would be lost, the upcoming tax
reform may turn out to be a smaller package or result in a
higher fiscal deficit.
U.S. stock futures were up 0.1 percent.
The dollar steadied after its worst week since Trump’s
election after talk of more rises in Federal Reserve interest
rates this year.
"Clearly we shouldn't forget we are going to see at least
two more hikes by the Fed this year and that there is still the
potential for the next one to be pulled forward to June," said
CIBC strategist Jeremy Stretch.
Sterling edged up a notch, trading within a narrow
range as Britain prepared to start formal divorce proceedings
with the European Union on Wednesday.
In emerging markets, the South African rand and government
bonds extended losses after Finance Minister Pravin Gordhan was
ordered home by the president, triggering speculation of an
imminent cabinet reshuffle.
Recent weakness in the dollar underpinned crude oil prices
though persistent worries about oversupply kept gains in check.
Prices for front-month Brent crude futures, the
international benchmark for oil, were up 0.6 percent. In the
United States, West Texas Intermediate (WTI) crude futures
rose 0.7 percent.
(Additional reporting by Patrick Graham; editing by Richard