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While you were sleeping: US healthcare vote looms

Friday 24th March 2017

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Wall Street advanced as investors scrutinised the vote on a Republican healthcare bill that is seen as a litmus test of US President Donald Trump’s credibility to push his agenda.

The vote in the House of Representatives could be delayed until Friday amid last-minute negotiations aimed at securing sufficient support.

“This process should be telling us that it’s going to be tougher for President Trump to get passed what he wants, and thus, policy is going to take longer to get implemented than what the markets are pricing in right now,” Matt Maley, equity strategist at Miller Tabak & Co in New York, told Bloomberg.

“Any bounce from a positive vote or them trying to shift toward a tax cut will be an opportunity to take some profits and hedge some positions because I don’t think it’ll last long,” Maley noted.

In 1.14pm trading in New York, the Dow Jones Industrial Average rose 0.2 percent, while the Nasdaq Composite Index added 0.05 percent. In 12.59pm trading, the Standard & Poor’s 500 Index gained 0.4 percent. 

"There's been a lot of optimism regarding the Trump administration so this could very well be the first setback," Erik Davidson, chief investment officer at Wells Fargo Private Bank in San Francisco, told Reuters. "What the market wants is to get through the healthcare question so that we can move on to tax reform."

The Dow moved higher as gains in shares of Nike and those of Goldman Sachs, up 2.6 percent and 1.3 percent respectively, outweighed declines in shares of Intel and those of UnitedHealth Group, down 0.4 percent and 0.3 percent respectively.

The latest US data underpinned an optimistic outlook for the economy. A Commerce Department report showed new home sales climbed a higher-than-anticipated 6.1 percent to a seasonally adjusted annual rate of 592,000 units in February.

A Labour Department report showed initial claims for state unemployment benefits rose 15,000 to a seasonally adjusted 258,000 for the week ended March 18.

"Rising mortgage rates don't appear to have been much of an impediment to increasing housing demand in February as solid job gains, faster wage growth, and stronger household formations offset the drop in affordability," David Berson, chief economist at Nationwide in Columbus, Ohio, told Reuters. 

In Europe, the Stoxx 600 Index finished the day with a 0.4 percent drop from the previous close. The UK’s FTSE 100 Index rose 0.2 percent, France’s CAC 40 Index climbed 0.8 percent, while Germany’s DAX Index rallied 1.1 percent.

Amid a food safety scandal that has prompted bans on Brazilian meat exports, JBS and BRF are pressing ahead with plans to list overseas units while seeking to shore up investor confidence with a campaign, arguing the country’s police probe into alleged bribery of health officials to overlook food safety breaches misstated facts, Reuters reported, citing four people involved in the deals.

JBS, the world’s biggest meatpacker, has no intention to delay the US$1 billion initial public offering of JBS Foods International in New York, which it hopes to finalise in May or June, one of the people said, according to Reuters.

BRF, the largest poultry producer, continues to analyse selling a US$1.5 billion stake in One Foods Holdings, its halal meats unit, through a London IPO or a private placement, another person said, Reuters reported.

Neither firm has seen a pushback from potential investors, said the people, who spoke under the condition of anonymity, because of the sensitivity of the matter, according to Reuters. JBS and BRF, both based in São Paulo, declined to comment.

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