Revived prospect of Trump tax-slashing deal lifts stocks

WORLD stocks climbed, along with the US dollar and bond yields, yesterday as investors anticipated President Donald Trump could make progress on his fiscal plans after the US Senate approved a budget blueprint that paves the way for tax cuts.

US Republican Senator Rand Paul appeared to back the administration’s sweeping tax 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.

The Senate budget resolution also sent US 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.

Equities rose on Wall Street, with financials – expected to benefit from the administration’s proposed policies – up 1pc as the best performer of 11 major S&P sectors.

But gains were curbed by declines in healthcare stocks, off 0.1pc, and General Electric, which lost 2.10pc after its third-quarter results and forecast cut.

“Investors need to see more than some progress, investors need to see a higher degree of certainty that there is a tradeable narrative underpinning the market,” said Peter Kenny, senior market strategist at Global Markets Advisory Group in New York.

The Dow Jones Industrial Average rose 104.13 points, or 0.45pc, to 23,267.17, the S&P 500 gained 8.34 points, or 0.33pc, to 2,570.44 and the Nasdaq Composite added 25.74 points. 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.