Delayed vote leaves investors in limbo

It’s been another mixed open for European stock indices this morning although overall there’s a slightly softer tone. It’s all been something of an anti-climax after yesterday’s anticipated House vote on repealing and replacing Obamacare was delayed. It’s unclear what may happen next although the president is pushing for the vote to take place today. Mr Trump has also said that without a vote he’ll move on to other issues and leave the controversial Affordable Care Act in place.

The outcome of the vote is viewed as a crucial test of the Trump administration’s ability to push through legislation not just on healthcare, but also on tax reform, future spending and regulatory roll-back. Trump can only afford to lose the votes of 22 Republicans, but ahead of the debate it appeared that as many as 30 representatives from the GOP were threatening to defy their president. This would be an early and unwelcome defeat for the new president and would undoubtedly delay any chances of fresh fiscal stimulus coming through this year. Given that the stock market rally since the November election has been based on Trump’s campaign promises, any possibility that these may not get through Congress raises the risk of a sharp market sell-off. Investors have been banking on fiscal stimulus to offset monetary tightening from the Fed, particularly as there are fears that US growth appears to be less robust than it was even a few weeks ago.