NEW YORK: Wall Street stocks suffered their worst declines of the year Tuesday (Wednesday in Manila) as doubts increased about President Donald Trump’s ability to advance his agenda in Washington.
All three major US indices fell sharply, with the Nasdaq tumbling the most with 1.8 percent decline, two days ahead of a key congressional vote on health care policy.
European equity markets also dropped, along with Japan’s Nikkei. Analysts said sinking oil prices also weighed on stocks.
Trump traveled to Capitol Hill to try to coax support from fellow Republicans for his health care bill, warning the party could lose its majority if it fails to repeal and replace Obamacare in Thursday’s vote.
Analysts fear a setback on health care will dim momentum for the rest of Trump’s agenda, including highly-anticipated tax cuts and deregulation.
“The markets have reversed” because of growing concern about possible opposition to Trump’s reforms within Republican party, said Gregori Volokhine of Meeschaert Financial Services.
Banking shares were especially weak, with Bank of America dropping 5.8 percent and Goldman Sachs losing 3.8 percent. The sector had been a highflyer after the election in anticipation of regulatory rollbacks promised by Trump.
“There seems to be doubt creeping in investors’ minds whether or not the deregulation that Trump talked about will be put into effect, as well as tax reform and lower tax rates,” said Bill Lynch, director of investment at Hinsdale Associates.
Elsewhere, London finished down 0.7 percent after official data showed British 12-month inflation soared to 2.3 percent in February, the highest level since 2013.
The news sent sterling flying higher on expectations of rising interest rates, putting pressure on FTSE companies.
The euro strengthened after a strong debate performance by French presidential candidate Emmanuel Macron lifted hopes the centrist could hold off far-right leader Marine Le Pen in the coming elections.
Paris equities slipped 0.2 percent, while the German DAX lost 0.8 percent.
Tokyo fell 0.3 percent as a rising yen hit export-oriented stocks.
US oil prices finished at their lowest price of the year at $47.34 per barrel, down 88 cents, on worries about rising US oil production.