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Here's what we're watching with trading underway in London. Global equities under pressure led by weaker commodities and financials as investors scrutinise the viability of the Trump trade. The dollar is weaker, havens like yen, gold, and government bonds finding buyers. As the dust settles over the failure to replace Obamacare, focus now on whether tax reform and other fiscal measures will eventuate. This
Is where the rubber meets the road for the Trump trade. Highflying equity markets had been underpinned by the promise of big tax cuts and fiscal stimulus, and Wall Street is [INAUDIBLE]. One big beneficiary of lower corporate taxes under Trump are small caps. They're now down 2.5% for the year. While the sector is still much higher since November, this is a key market barometer of prospects for the Trump trade. Now, while many still think some measure of tax reform or spending will eventuate, markets are very wary, namely, of the risk that Congress and the Trump administration failed to reach agreement on legislation. But unlike health care reform, matters a great deal more to investors.
