Stocks dip on US tax doubts
london — World stocks edged lower on Friday on signs that US tax reforms could be delayed after Senate Republicans unveiled a plan that differed significantly from the House of Representatives’ version.
MSCI’s global stock index, which tracks shares in 47 countries, declined 0.1 per cent, slipping further from a record level.
On Thursday the global index failed by one day to post its longest winning streak since 2003 as it fell 0.4 per cent following 10 days straight of gains.
The pan-European STOXX 600 index was on track for its worst week in three months, however, down 0.3 per cent on Friday and falling for a fourth day in row.
The MSCI world index has gained more than 18 per cent so far this year and some investors believe a pullback is due.
“I think there’s a feeling out there that there’s a long awaited correction, and no one wants to be caught by surprise,” Emmanuel Cau, global equity strategist at JP Morgan, said.
“When the market is down a bit people tend to extrapolate. But I think it’s simply a bit of profit taking and digesting from a very strong September and October.”
On Wall Street, futures for the S&P 500 fell 0.4 per cent, while Dow futures were down 0.2 per cent, with the indexes set to extend Thursday’s losses.
The hiatus over tax reforms weighed on the dollar on Thursday. It recovered some ground on Friday to trade 0.2 per cent higher at 94.587 but was still set for its biggest weekly drop in four weeks.
Overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3 per cent. Japan’s Nikkei lost 0.8 per cent, slipping off Thursday’s 21-year high after a 16 per cent rally in the past two months. But the index had a ninth consecutive week of gains.
Strength in the global economy is expected to continue offering broad support to stocks. “Yesterday the European Commission revised up its economic growth forecast and cut its inflation forecast. And we can find the same story in the world as a whole. Growth is seen higher while inflation will remain tame,” said Shuji Shirota, head of macro economic strategy group at HSBC. — Reuters