On Tuesday, world stocks steadied following their largest hike in nearly six-months on U.S. tax cut optimism had added to one of the strongest and longest global bull runs recorded.
South Africa’s rand calmed following the ANC leadership win for the market’s preferred candidate produced the largest increase since 2008, while the dollar remained a no show regardless of Wall Street’s most recent record highs.
Futures markets were drawing attention to the S&P 500 and Dow Jones both advancing as U.S. Congress is scheduled to vote highly anticipated tax cuts and as the bill is likely to be signed into law before the Christmas Holiday.
Overnight, the World Bank raised its China growth prediction, Switzerland increased its 2018 projections and business confidence remained healthy in Germany. Britain’s FTSE and Spain IBEX both move forward 0.1-0.2 percent higher, while the DAX and France’s CAC took a step back. The euro and the pound both made some headway in the FX market.
“The dollar is not excited about tax reform,” said head of FX strategy, John Hardy. “It could just be year-end effects but maybe people are just weighing the negatives. Maybe it won’t boost growth that much… and maybe it is going to blow a hole in the fiscal deficit.”
THE HERALD FINANCE REPORT
Start your workday the right way with the news that matters most.
Regarding stocks, the changes would cut U.S. corporate tax rates to 21 percent, which investors are betting will increase profits and produce share buybacks as well as higher dividend payouts.
Wall Street’s latest record was trailed by most of Asia’s main bourse with the exception of Japan’s Nikkei as it was pushed downwards by a stronger yen.
Australian shares increased 0.55 percent, Hong Kong’s Hang Seng climbed 0.8 percent and Shanghai rose 0.6 percent.
“The rising trend in broader equities led by the U.S. markets looks to continue for a while,” said Masahiro Ichikawa, senior strategist of asset management in Tokyo.
The dollar index dropped 0.15 percent to 93.557 following its overnight loss of 0.25 percent as questions regarding the economic impact of the tax overhaul linger.