Stock bulls carry on, dollar keeps calm

LONDON: World stocks steadied yesterday after their biggest jump in almost six-months on U.S. tax cut hopes had added to what is already one of the strongest and longest global bull runs on record.

South Africa’s rand also took a rest after the ANC leadership win for the market’s preferred candidate triggered its biggest surge since the volatile days of 2008, while the dollar remained a no show despite Wall Street’s latest record highs. Futures markets were pointing to the S&P 500 and Dow Jones both nosing ahead later with U.S. Congress set to vote on long awaited tax cuts and reforms and with the bill likely be signed into law by the end of the week.

Traders were still being peppered by upbeat data too. The World Bank raised its China growth forecast overnight, Switzerland pushed up 2018 projections and business confidence remained robust in Germany, albeit with some caution about its struggle to form a coalition government. Britain’s FTSE and Spain IBEX both edged 0.1-0.2 percent higher and though the DAX and France’s CAC wobbled backwards, the euro and the pound both made some ground in the FX market. “The dollar is not excited about tax reform,” said Saxo Bank’s 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.” For stocks though, the changes would cut US corporate tax rates to 21 percent from 35 percent, which investors are betting will boost profits as well as trigger share buybacks and higher dividend payouts.

Wall Street’s latest record - there have now been 70 this year on the Dow - had been followed by most of Asia’s main bourse with the notable exception of its biggest - Japan’s Nikkei - which was dragged back by a stronger yen. Australian shares added 0.55 percent, Hong Kong’s Hang Seng rose 0.8 percent and Shanghai lifted 0.6 percent though to keep the region upbeat.

“The rising trend in broader equities led by the US markets looks to continue for a while,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo. —Reuters