Growing doubts that President Trump will be able to deliver on a promise of tax cuts that has powered stocks markets to record highs has pushed shares lower. And, as David Pollard reports, Japan's growing exports may also raise tensions in the face of rising U.S. protectionism.
It was a day to take cover. The boards turning negative as Wall Street and Asia's sharp losses followed through into Europe. Traders talking of a Trump dump .... As they turn attention to the US president - and whether he can muster lawmakers' support for big policy pledges. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "The issues in relation to the healthcare reform are seen as a little bit of a litmus test of the Trump administration. Not in terms of the context of health per se, but its ability to push through with the regulatory changes that certain markets had been hoping for." Beyond that, a bigger test looms. Can Trump deliver on the promise of massive tax cuts that's boosted share markets to multiple highs? (SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "We need to see a lot more detail than we've seen so far. And the markets will have only so much patience, having factored in so much optimism." Even better Japanese trade numbers did little to lift sentiment. After Trump's warnings on protectionism, an 11 per cent rise in exports seen highlighting Japan's widening trade surplus as a concern. Though there too there's a sense campaign rhetoric may ultimately get reined in. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "If there were to be trade barriers erected, largely emanating from of the US, I think it would be a lose-lose situation for the global economy ... In aggregate global growth would be lower, global living standards would be lower, and that would also impact the US." The dollar was down and gold up to a three-week peak as traders sought safety. Many already looking ahead to the US first-quarter earnings season next month. The test next time not so much for Trump - but for US corporates - and for share markets themselves.