UKX FTSE 100 Index

By Riva Gold, Kevin Kingsbury and Kenan Machado 
   -- Stocks in Europe and Asia under pressure 
 
   -- Dollar falls to postelection low as investors eye Washington 
 
   -- Netflix, Goldman Sachs, Bank of America earnings in focus 

Global stocks were under pressure Tuesday while the dollar fell to postelection lows after Senate Republicans gave up their efforts to dismantle and replace much of the Affordable Care Act.

The Stoxx Europe 600 was down 0.5% in morning trading, following modest declines across Asian markets. Futures pointed to a 0.1% opening loss for the S&P 500 ahead of a flurry of earnings reports.

A steep fall in the dollar sent Asian and European currencies higher, pressuring shares of exporters in those regions on Tuesday. The Wall Street Journal Dollar Index, which hit its lowest level since October on Friday, was recently down 0.4%, while the euro topped $1.15 for the first time since May 2016 and was last up 0.4% at $1.1528. The British pound rose 0.4% to $1.3108, sending the FTSE 100 down 0.6%.

Downward pressure on the dollar comes after the U.S. currency surged following President Donald Trump's election win. Some stocks also gained on expectations the new administration would cut taxes, deregulate and invest in infrastructure. Such investor enthusiasm has waned this year, even as stocks have continued to power ahead.

Investors said the recent struggle to pass a health-care bill added to doubts about the likely implementation of the other policies backed by the Trump administration.

If Republicans can't pass a replacement health-care bill, "there is little else [they] could do" with passing other legislation, said Toshihiko Sakai, senior manager of forex and financial-products trading at Mitsubishi UFJ Trust and Banking.

Fiscal policy is now going to be in the spotlight, said Luke Tilley, chief economist at Wilmington Trust. "Once the health care debate and legislation is done, I expect a sudden shift in focus to prospective tax reform, which will have a larger impact on sector performance and dispersion," said Mr. Tilley.

Investors were also focused on corporate earnings Tuesday with Goldman Sachs Group Inc. and Bank of America Corp. set to report results ahead of the opening bell.

Shares of Netflix Inc. were up 10% in aftermarket trading Monday after the company blew through its subscriber-growth estimate in the second quarter.

In Europe, shares in Swedish telecoms-equipment maker Ericsson were down 10% in early trading after the company warned that earnings could weaken further after swinging to a net loss in the second quarter. Shares of Anglo-Australian mining house Rio Tinto fell 2% after it scaled back its export guidance for iron-ore production. Iron ore was the biggest driver of Rio Tinto's earnings last year.

Earlier, consumer cyclicals, or companies whose output of consumer goods tend to be tied to economic growth, led losses in Asia-Pacific trading Tuesday, as weakness in the dollar weighed down on market sentiment in Australia and Japan.

The Australian dollar jumped 1.5% to its highest level against the greenback in two years, getting an additional boost from the release of minutes from this month's central-bank meeting. During the gathering, Australian officials discussed the effects of a neutral interest-rate policy. Australia's S&P/ASX 200 fell 1.2% amid declines in big banks, as well as health-care shares.

Weakness in the dollar--both Tuesday and from Friday after weak U.S. economic data--filtered through Japanese stocks after Monday's holiday. The Nikkei was down 0.6% Tuesday, while the dollar was last down 0.4% against the yen at Yen112.1620.

Chinese stocks recovered slightly after Monday's slump. The Shenzhen Composite was up 0.5%, while the Shanghai Composite added 0.4%.

Elsewhere in markets, gold edged up 0.2% to $1,235 an ounce. Yields on 10-year Treasurys fell to 2.304% from 2.309% on Monday. Yields move inversely to prices.

Kosaku Narioka and Robb M. Stewart contributed to this article.

Write to Riva Gold at riva.gold@wsj.com, Kevin Kingsbury at kevin.kingsbury@wsj.com and Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

July 18, 2017 04:47 ET (08:47 GMT)

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