However, expectations on a big stimulus are dissipating. Markets were disappointed by his failure to push through legislation and cement policies into law. Although Trump may have scored a narrow win with the US House of Representatives repealing the healthcare bill; a tougher hurdle lies ahead when the bill goes to the Senate for conside

29 April 2017 marked Donald Trump’s first 100 days in the White House. This also marked the time to turn words into action through legislation. Trump entered the White House with a handful of cards up his sleeves – pro-trade policies, promise of infrastructure spending, more job creation, improving security at the borders and non-interference in foreign affairs. All these are to “Make America Great Again”.

However, expectations on a big stimulus are dissipating. Markets were disappointed by his failure to push through legislation and cement policies into law. Although Trump may have scored a narrow win with the US House of Representatives repealing the healthcare bill; a tougher hurdle lies ahead when the bill goes to the Senate for consideration.  Although the stock market rally was driven by the market’s optimism on Trump’s policies, subsequent disappointing news from the administration has not triggered significant unwinding of the rally. This was mainly because the gap left by Trump was filled with strong US corporate earnings. Additionally, the easing of France’s political risk also boosted the global stock market.

Asian markets generally outperformed after Trump’s inauguration. There were fund outflows from the US market in view of its rich valuation to other markets with cheaper valuation. Furthermore, market expectations on the speed of Fed rate hikes and the USD strength have been gradually fading during this period, which supported the ASEAN markets. India and Europe are the best performers due to the easing of political risks. Similarly, the KLCI has recovered by 6% or 100 points to 1,768 during these 100 days as the USD weakened and the new president became more pro-trade. Bond prices have also been on a rising trend with yields moderating by 18bps to 2.29% since he entered the White House after falling to as low as 2.17% in mid-April 2017. Accordingly, bond yields in emerging markets have fallen on inflows including on the local front, where the Malaysia MGS yields fell 21bps to 4.04%.

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