A man walks past an electronic stock board showing Japan’s Nikkei 225 index at a securities firm in Tokyo, on June 27, 2017. (Eugene Hoshiko/AP)
Asian shares slumped on Wednesday after Wall Street was knocked hard in the wake of a delay to a U.S. health-care reform vote, while the euro rallied after European Central Bank President Mario Draghi hinted that the ECB could trim its stimulus this year.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent in early trading, while Japan’s Nikkei share average also slipped 0.2 per cent.
On Tuesday, the benchmark S&P 500 posted its biggest one-day drop in about six weeks and closed at its lowest point since May 31, after the U.S. Senate’s move to delay voting on a health-care reform bill rekindled worries on the timeline for President Donald Trump’s business-friendly policies.
U.S. stocks accelerated their losses after Senate Republican leader Mitch McConnell decided to put off a planned vote on a bill to dismantle the Affordable Care Act until after the Senate’s July 4 recess, to get more time to garner sufficient votes for its passage.
Against the perceived safe-haven yen, the dollar slipped 0.3 per cent to 112.120 after rising as high as 112.285 yen.
The dollar index, which gauges the U.S. currency against a basket of six major counterparts, edged up 0.1 per cent to 96.442 but was still well below its previous session high of 97.447.
The euro was up 0.4 per cent at $1.1339. It notched a 10-month high of $1.1345 after Draghi, speaking to a conference in Portugal, said the ECB could adjust its policy tools as economic prospects improve in Europe.
Some strategists said that once the dust settled from the impact of his comments, the euro could give back some of its gains.
“These weren’t very hawkish comments, as he suggested some changes to policy although the overall stance did not change,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
“To me, it seems the change in policy will not be very substantial, so I think in the coming days, ECB officials will try to water down Draghi’s comments,” he said.
Crude oil futures dropped, giving back some of their overnight surge. Prices rose nearly 2 per cent on the weaker dollar, short-covering and expectations that U.S. crude inventories might decline for a third consecutive week.
Brent crude futures fell 0.6 per cent to $46.35 per barrel. U.S. crude futures were down 0.9 per cent at $43.86.