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GLOBAL MARKETS-U.S. tax plan hopes lift stocks, strengthen dollar
October 20, 2017 / 5:35 PM / a month ago

GLOBAL MARKETS-U.S. tax plan hopes lift stocks, strengthen dollar

* U.S. Senate passes budget plan that could usher in tax reform

* Stocks advance but GE, Celgene lag

* Crude up modestly but set for weekly loss (Updates with close of European markets)

By Chuck Mikolajczak

NEW YORK, Oct 20 (Reuters) - World stocks and bond yields rose and the U.S. dollar strengthened on Friday, as investors anticipated President Donald Trump could make progress on his fiscal plans after the U.S. Senate approved a budget blueprint that paves the way for tax cuts.

U.S. Republican Senator Rand Paul appeared to back the administration’s sweeping tax cut plan, saying he was “all in” for massive tax cuts, even as the Senate passed a key budget measure without his support one day earlier.

Equities rose on Wall Street, with financials, which are expected to benefit from the administration’s proposed policies, up 1.16 percent as the best performer of 11 major S&P sectors.

“It clearly is a positive and has added to the sentiment,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

“Any legislative action that promotes economic growth, clearly will be additive to not only sentiment but presumably earnings.”

Housing stocks also moved higher, up 0.73 percent, after data from the National Association of Realtors showed U.S. home resales unexpectedly increased in September.

But gains were curbed by declines in Celgene, off 10.04 percent after the company said it would abandon drug trials for a Crohn’s disease treatment.

General Electric also lagged, down 0.30 percent after its third-quarter results and forecast cut.

The Dow Jones Industrial Average rose 134.39 points, or 0.58 percent, to 23,297.43, the S&P 500 gained 11.47 points, or 0.45 percent, to 2,573.57 and the Nasdaq Composite added 33.14 points, or 0.5 percent, to 6,638.20.

The dollar index, tracking the greenback against a basket of major currencies, rose 0.44 percent, with the euro down 0.6 percent to $1.1779.

Bets that Trump’s planned tax cuts, infrastructure spending and other pro-business measures would push up growth and inflation had been behind a reflation trade that propelled the dollar to 14-year highs earlier this year.

European shares rebounded from their worst day in two months, also helped by well-received earnings reports for Volvo and Ericsson and high German producer-price inflation numbers.

The pan-European FTSEurofirst 300 index rose 0.24 percent. MSCI’s world equity index, which tracks shares in 47 countries, gained 0.10 percent, just shy of a record intraday high.

The Senate budget resolution also sent U.S. Treasury yields higher, with two-year yields reaching a near nine-year high, as investors reduced bond holdings on worries about more inflation and federal borrowing.

Benchmark 10-year notes were last down 17/32 in price to yield 2.3809 percent, from 2.321 percent late on Thursday.

The increased risk appetite also sent gold lower. Spot gold dropped 0.8 percent to $1,279.08 an ounce. U.S. gold futures fell 0.74 percent to $1,280.50 an ounce.

U.S. crude rose 0.23 percent to $51.63 per barrel and Brent was last at $57.49, up 0.45 percent. Still, oil was set for a weekly loss as investors sought to book profit, despite tensions in the Middle East that have slashed supplies of crude.

Additional reporting by Sruthi Shankar; Editing by James Dalgleish

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