Equity markets dip on US tax plan as euro weakens
NEW YORK (Reuters) – Key world stock markets dipped on Thursday, after a three-day rally, in the wake of a largely expected US tax-cut plan, while the euro weakened after comments from European Central Bank President Mario Draghi.
On Wall Street, stocks edged lower after a lukewarm reception for US President Donald Trump’s tax plan unveiled on Wednesday, some of the details of which were largely expected by investors.
The plan proposes deep US tax cuts, many for businesses, that would make the federal deficit balloon if enacted. The market now is waiting to see if the proposal will become law.
“It is getting to the point, this may be the last sort of hurrah for the ‘hope trade’ – the announcement of the tax cut,” Tom Siomades, head of the Investment Consulting Group of Hartford Funds, said in an interview with Reuters, referring to the stock-market rally since Trump’s election.
However, losses on Wall Street Thursday were curbed as corporate earnings continue to show strong results for the quarter. Comcast was the top boost to the benchmark S&P 500 index after its results.
“You still have this upward press of real solid earnings and good economic data,” Siomades said. “But if this deteriorates at all, you are going to have a blow down.”
US economic data showed new orders for key US-made capital goods rose less than expected in March. But a second straight monthly increase in shipments suggested business investment accelerated in the first quarter.
In afternoon trading, the Dow Jones Industrial Average fell 11.39 points, or 0.05%, to 20,963.7, the S&P 500 lost 1.11 points, or 0.05%, to 2,386.34, and the Nasdaq Composite added 16.81 points, or 0.28%, to 6,042.04.
Europe’s main bourses fell as much as 0.5% as traders pulled back after a six-session winning streak on relief at the outcome of the first round of France’s presidential election and encouraging earnings.
The pan-European FTSEurofirst 300 index lost 0.21%, and MSCI’s gauge of stocks across the globe shed 0.15% to retreat from a record.
As widely expected, the ECB made no changes to its record-low interest rates or stimulus program. But euro-zone government bond yields and the euro fell after Draghi said policy makers did not discuss removing the bank’s easing bias on monetary policy at this month’s meeting.
The benchmark 10-year Bund yield was last down almost 5 basis points to 0.302%. The euro was down 0.34% to $1.0866 against the dollar.
The Canadian dollar and Mexican peso went in opposite directions after the US said it would not scrap the North American Free Trade Agreement (NAFTA).
The Mexican peso strengthened 0.53% versus the US dollar to 19.08.
The Canadian dollar weakened 0.32% versus the greenback to 1.37.
Microsoft, Amazon.com and Google parent Alphabet were scheduled to report results after the closing bell on Wall Street. First-quarter earnings were expected to show growth of 12.4%, according to Thomson Reuters data, the most since 2011.
Oil prices retreated after news that two key oilfields in Libya had restarted, pumping crude for export into an already bloated market.
US crude fell 2.5% to $48.38 per barrel, and Brent was last at $51.12, down 2.46% on the day.