World equity markets wobbled Friday, with US stocks finishing mostly lower, as investors monitored a swirl of negotiations surrounding President Donald Trump's health care replacement bill, before the surprise decision to cancel the vote in Congress.
The fate of the repeal of former president Barack Obama's signature legislation has been seen by US and international investors as a critical early test for the Trump administration's capacity to push its agenda through Washington.
Expectations for pro-growth policies from Washington have fueled a worldwide stock rally since Trump's election win in November.
The health care replacement was heading for almost certain defeat before congressional leaders canceled the vote at Trump's request just before it was to take place Friday afternoon, despite pressure from Trump in person Thursday and in tweets Friday morning to pass the bill.
Stocks hit session lows shortly before the decision to pull the plug on the bill, but the market regained some ground after the news became public that the vote would not happen.
The late rebound, which was not enough to lift the Dow and the S&P 500 into positive territory, appeared to stem from the idea that canceling the vote was a better outcome than an actual defeat.
"It's a setback but the market is telling you it's a minor setback," said JJ Kinahan, chief market strategist at TD Ameritrade.
Kinahan said investors had seen the health care vote as an important source of momentum for the Trump agenda, with the most important item being a tax cut plan.
"The entire rally has been pretty much about the tax bill," he said.
Briefing.com said, "The president made it clear that, if the American Health Care Act didn't make it out of the House on Friday, his administration would be moving on to tax reform."
"That notion is somewhat comforting to investors, but since health care reform went nowhere, the reliability of such a promise will certainly be put into question."
While the Dow and S&P 500 both ended down, the Nasdaq scraped a 0.2 percent gain in part due to a rally in semiconductor shares following strong earnings from Micron Technology.
Bourses in London and Paris declined, while Frankfurt finished modestly higher and the Nikkei in Japan rose on a cheaper yen.
- Overseas investors watching Trump -
Analysts overseas also expressed concerns about the implications of a Trump setback on health.
"The threat of a rejection in Congress for Trump's Obamacare replacement has brought about significant doubts over his ability to pass his corporate tax cut this week," noted IG analyst Joshua Mahony in London.
Greg McKenna, chief market strategist at CFD and FX provider AxiTrader in Australia, said a win on health would have been a major positive for Trump, who is struggling with a fractious Republican party, controversy over alleged links to Russia and record low popularity ratings.
However, McKenna added: "If it fails then the whole house of cards that's been built up since the election can come crashing down as traders and investors wonder what the heck will happen to tax and infrastructure plans."
- Key figures around 2100 GMT -
New York - Dow: DOWN 0.3 percent at 20,596.72 (close)
New York - S&P 500: DOWN 0.1 percent at 2,343.98 (close)
New York - Nasdaq: UP 0.2 percent at 5,828.74 (close)
London - FTSE 100: DOWN 0.1 percent at 7,336.82 (close)
Frankfurt - DAX 30: UP 0.2 percent at 12,064.27 (close)
Paris - CAC 40: DOWN 0.2 percent at 5,020.90 (close)
EURO STOXX 50: DOWN 0.2 percent at 3,444.67
Tokyo - Nikkei 225: UP 0.9 percent at 19,262.53 (close)
Hong Kong - Hang Seng: UP 0.1 percent at 24,358.27 (close)
Shanghai - Composite: UP 0.6 percent at 3,269.45 (close)
Euro/dollar: UP at $1.0805 from 1.0791
Pound/dollar: DOWN at $1.2492 from $1.2524
Dollar/yen: UP at 111.12 yen from 110.98 yen
Oil - West Texas Intermediate: UP 27 cents at $47.97 per barrel
Oil - Brent North Sea: UP 24 cents at $50.80 per barrel