Updated June 23, 2017 09:01:13

Photo: News the biggest US banks had passed the first stage of the Fed's "stress test" came too late to give Wall Street much of a lift overnight. (Reuters: Brendan McDermid)

The Australian stock market is set to open flat, following a lacklustre lead from US equities.

The New York bourse essentially broke even, not making any substantial gains or losses.

Healthcare was the best performing sector on Wall Street, which helped keep the US market afloat, while banking stocks were amongst the worst performers.

Oil prices managed to rebound, after falling sharply to a 10-month low this week.

Market sentiment was still negative as the global crude glut continues despite OPEC's output cuts.

It was forecast to be a quiet day for Australian economic news, as no official data is to be released today.

Investors bracing for Obamacare repeal

American healthcare shares posted sharp gains after Senate Republicans released draft legislation to replace the Affordable Health Care Act, otherwise known as Obamacare.

The draft bill proposes to kill a tax on the wealthy that pays for the health insurance regime, and reduce subsidies to the poor in order to cut costs.

As a show of optimism, the S&P healthcare index has risen 3.9 per cent in the last five days.

But not long after the unveiling of the draft bill, Senator Rand Paul and three other conservative Republicans, announced they were "not ready to vote" for it.

Democrats need the support of only three Republicans to quash the measure in the Republican-led chamber.

If the Republicans manage to successfully repeal Obamacare, this will be a symbolic victory for the Trump administration.

US President Donald Trump made the Obamacare-repeal a centrepiece of his election campaign.

He previously said that his priority is to enact "healthcare reform" before he proceeds to reduce corporate taxes — the prospect of which has driven the global stock market rally since November 2016.

The Obamacare legislation was credited with expanding health insurance to millions of Americans since its passage in 2010.

However, Republicans say it costs too much and involves the federal government too much in healthcare.

The Senate is expected to vote on the bill next week.

US banks pass first hurdle in Fed's stress tests

Financials stocks were among the worst performers on Wall Street, as nervous investors monitored how the banks would fare in the Federal Reserve's stress test.

After the close of trade, the Fed revealed that America's 34 largest banks had all cleared the first stage of its annual test, which was introduced in the wake of the Global Financial Crisis.

It assesses whether the banks are able to maintain enough capital, in the event of an extreme recession.

The banks that were tested include Morgan Stanley, Barclays, Goldman Sachs, JP Morgan, Citibank, Bank of America and Credit Suisse.

However, they still need to pass the second portion of the test in which the central bank approves or denies their capital plans.

The Fed was expected to release that component next week.

"This year's results show that, even during a severe recession, our large banks would remain well capitalised," Federal Reserve governor Jerome Powell said.

"This would allow them to lend throughout the economic cycle, and support households and businesses when times are tough."

Topics: company-news, stockmarket, currency, australia, european-union, united-states

First posted June 23, 2017 08:51:22