U.S. equities had the worst day of the year for stocks on Tuesday, as banks struggled with falling yields and over concerns that President Donald Trump faces legislative roadblocks in passing a healthcare overhaul. Trump has suggested the GOP cannot move forward with tax reform plans until lawmakers keep the promise to repeal and replace Obamacare. The Dow Jones industrial average dropped 1.14% to close at 20,668.01, the S&P 500 tumbled 1.24% to end at 2,344.02 and the Nasdaq composite dropped 1.83% to close at 5,832.53.
Since Trump's presidential victory last November, there have been expectations for deregulation, tax reform and an increase in fiscal spending. But the Trump administration has indicated that healthcare reform would take precedence over tax reform. House Republicans are expected to vote on repealing and replacing the Affordable Care Act on Thursday with the votes needed for passage in doubt.
The markets also noted comments from Cleveland Federal Reserve President Loretta Mester on Tuesday in the U.S. that if economic data holds up she would support a reduction in the Fed's $4.5 trillion balance sheet.
Stocks globally and the U.S. dollar have broadly rallied in the wake of President Donald Trump's election in November, buoyed by his talk of a tax overhaul and infrastructure investment. However, roadblocks have risen ahead of Thursday's scheduled vote to dismantle the Affordable Care Act, triggering a market pullback Tuesday in the U.S. that has carried overseas and has investors questioning Trump's ability to make good on his policy promises. Market participants are doubtful of whether President Trump is able to deliver his 'phenomenal' tax cuts.
During Asian hours, U.S. crude fell 0.1% to $48.18 a barrel, after it fell to its lowest since Nov. 29 to settle at $47.34 during U.S. hours on Tuesday. Brent crude was flat at $50.94. Late Tuesday in the U.S., the American Petroleum Institute reported a 4.53 million barrels build in crude stocks at the end of last week, nearly double the expected gain.
Spot gold was trading at $1,244.36 per ounce, up for its sixth consecutive session and near a three-week high.
Among Asian bourses
Australia Shares end notably down
Australian equity market finished session steep down, on following the negative lead from Wall Street overnight amid worries that U.S. President Donald Trump will face hurdles in delivering promised tax and healthcare reform. In addition, weak commodity prices weighed on resources stocks. At the close, the benchmark S&P/ASX 200 index surrendered 90.10 points, or 1.56%, to 5,684.50, while the broader All Ordinaries index backtracked 87.50 points, or 1.5%, to 5,732. Falling stocks outnumbered advancing ones on the Australia Stock Exchange by 771 to 343 and 324 ended unchanged. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was up 21.22% to 12.386.
The financial index shed 2.08%, on tracking similar losses in its US financial counterpart. ANZ Banking, Westpac Banking Corp and Commonwealth Bank of Australia fell more than 2% each.
Mining giants Rio Tinto, BHP Billiton and Fortescue Metals Group fell 2.6%, 2.9% and 5.3%, respectively after copper, steel and iron prices dropped on Tuesday.
Bucking the trend, gold miners advanced after gold prices rose to a near three-week high overnight on increased safe-haven demand. The gold index rose as much as 3.34% and hit its highest in three weeks. Newcrest Mining and Evolution Mining gained around 2%. Evolution Mining said it expects to achieve its March quarter and full-year production guidance.
Nikkei falls over Trump policy concerns
The Japan share market tumbled to lowest level in six-week on mirroring the sharp overnight fall on Wall Street, after investors saw the Trump administration's struggles to push through the healthcare overhaul as a sign he may also face setbacks delivering promised corporate tax cuts. In addition, yen appreciation against greenback weighed on exporters stocks. The 225-issue Nikkei Stock Average shed 390.51 points, or 2.01%, to 19,065.37, its lowest since 9 February 2017. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 29.52 points, or 1.89%, to 1,533.90. Falling stocks outnumbered advancing ones on the Tokyo Stock Exchange by 2873 to 326 and 169 ended unchanged. The Nikkei Volatility, which measures the implied volatility of Nikkei 225 options, was up 6.63% to 15.59.
Japanese defense names were broadly lower after an apparent North Korea missile test that reports said failed. Reuters, citing Yonhap news agency, reported the isolated nation in the Korean peninsula may have conducted a missile launch with a U.S. military spokesman adding that "a missile appears to have exploded within seconds of launch." Shares of Kawasaki Heavy Industries fell 3.92%, Komatsu fell 1.96% and ShinMaywa Industries was down 2.21%.
The stronger yen battered export-oriented names, including automakers Toyota and Fuji Heavy, electronic parts supplier Murata Manufacturing and industrial robot manufacturer Fanuc.
Mega-bank group Mitsubishi UFJ, brokerage firm Nomura, and insurers Tokio Marine and Dai-ichi Life met with heavy selling after their U.S. peers lost ground in New York on Tuesday.
By contrast, Nintendo attracted hefty purchases with investors taking heart from a media report that the game-maker plans to boost production of the Nintendo Switch video game console.
China Stocks snap two-day winning streak
The Mainland China equity market ended down for the first time in three consecutive session, due to worries over tightening liquidity in the domestic banking system, and uncertainty over whether US President Donald Trump will be able to get his economic policies approved in a timely fashion. Main sectors fell across the board, led by banks and property stocks. The blue-chip CSI300 index fell 0.5%, to 3,450.05 points, while the Shanghai Composite Index lost 0.5% to 3,245.22 points. The Shenzhen Composite Index lost 6.05 points or 0.30% to end at 2,037.89.
Investors were concerned about tightening liquidity in the banking system as the end of the quarter nears. Short-term interest rates in China surged on Tuesday as cash conditions tightened on worries the central bank's quarterly risk assessment at the end of this month would restrict lending in the interbank market.
Investors are worried that US President Donald Trump will struggle to deliver promised tax cuts that propelled the market to record highs in recent months, with nervousness deepening ahead of a key healthcare vote on Thursday. The market also questioned Trump's ability to pass tax and spending reforms further down the line
Banks and property stocks declined, as a central bank survey found that 52.2% of urban households believed housing prices were "unacceptably high" in the first quarter. That reinforced expectations authorities will be more aggressive to cool a red-hot property market, even at the risk of dampening economic growth. Agricultural Bank of China shed 0.31%, while Bank of China tumbled 1.37%, Industrial and Commercial Bank of China dropped 1.06%, Vanke lost 0.52%, and Gemdale skidded 2.54%. Bucking the broad trend, stocks related to the "One Belt, One Road" infrastructure initiative continued to outperform, led by heavyweight infrastructure shares, as they were seen benefiting from the initiative.
Hong Kong Stocks tumble on Trump policies concerns
The Hong Kong stock market closed session lower, dragged down by concerns over implementation of U.S. President Donald Trump's economic policies, with particular worries around trade and a possible slow process toward any tax reform. The Hang Seng Index ended down 272 points or 1% to 24,320. The H-share index fell 187 points or 1.8% to 10,456. Turnover increased to HK$103.5 billion from HK$95.2 billion on Tuesday.
AAC Tech (02018) edged down 0.1% to HK$86.5 after hitting a day low of HK$83.65 even though its 2016 earnings growth of 29.6% to RMB4.03 billion. Chinese Overseas (00688) and CR Land (01109) also reported better than expected earnings. But both stocks fell 1.8% and 1.6% to HK$24.25 and HK$22.05.
Geely Automobile (00175) soared 5.8% to HK$11.98 after it reported 2016 net profit surged 126% to RMB5.11 billion. Brilliance China (01114) also put on 4.3% to HK$13.24 after HSBC Research upgraded its target price to HK$16.1 from HK$12.8.
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