| LONDON, March 28
LONDON, March 28 Stocks recovered while the
dollar hovered above 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.
The dollar index against a basket of major currencies was
trading almost half a percent above Monday's four-and-a-half
month low at 99.252, but up just 0.1 percent on the day
after a volatile session in Asia.
Europe's STOXX 600 rose 0.1 percent helped by
financials and pharmaceutical stocks. Stock futures on Wall
Street were little changed.
"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.
Talk of more rises in Federal Reserve interest rates this
year helped halt the dollar's slide after its worst week since
Analysts said appearances by Dallas Federal Reserve Bank
President Robert Kaplan and Chicago Fed chief Charles Evans that
put the emphasis back on the prospect of more rises in U.S.
interest rates gave support to the U.S. currency.
"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 traded 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, trading down 1.9 percent, after
Finance Minister Pravin Gordhan was ordered home by the
president, triggering speculation of an imminent cabinet
Recent weakness in the dollar and supply disruption in Libya
underpinned crude oil prices.
Prices for front-month Brent crude futures, the
international benchmark for oil, were up 0.7 percent. In the
United States, West Texas Intermediate (WTI) crude futures
rose 0.8 percent.
(Additional reporting by Patrick Graham; editing by Richard