NEW YORK (Reuters) - Global stock markets rose on Monday, along with the dollar and Treasury yields, after a major U.S. tax overhaul cleared an important hurdle. Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., December 4, 2017. REUTERS/Lucas JacksonMarkets reacted strongly to the U.S. Senate’s approval on Saturday of the biggest tax law change since the 1980s, taking President Donald Trump closer to his goal of slashing taxes on businesses. On Wall Street, the benchmark S&P 500.SPX and Dow industrials.DJI rose to record highs, while MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.48 percent and hit an all-time peak. “The big story is indeed the tax reform passage. Until fairly recently, markets were pretty sceptical about whether anything was actually going to happen,” said Brad McMillan, chief investment officer for Commonwealth Financial Network in Waltham, Massachusetts. “This can have a meaningful impact on corporate earnings here in the U.S. So you are largely seeing a repricing of the U.S. markets based on that,” McMillan said. The Republicans’ tax plan is expected to add $1.4 trillion over 10 years to the $20 trillion national debt to finance changes that they say would further boost an already growing economy. By mid-afternoon, the Dow Jones Industrial Average .DJI rose 199.59 points, or 0.82 percent, to 24,431.18, the S&P 500 .SPX gained 14.62 points, or 0.55 percent, to 2,656.84 and the Nasdaq Composite .IXIC dropped 11.57 points, or 0.17 percent, to 6,836.02. Some of the biggest gainers were from areas expected to benefit from a lower corporate tax rate. The S&P 500 banks index .SPXBK surged 3.0 percent, while the Dow Jones Transport Average .DJT jumped 2.8 percent. “Financials should benefit from not only tax reform but as we start to see rates move higher, their interest margins become more profitable,” said Emily Roland, head of investment research at John Hancock Investments in Boston. Aetna (AET.N) shares slipped 0.8 percent after drugstore chain operator CVS Health (CVS.N) agreed to buy the health insurer for $69 billion. CVS shares fell 4.8 percent. FILE PHOTO: U.S. dollar notes are seen in this November 7, 2016 picture illustration. REUTERS/Dado Ruvic/Illustration/File PhotoIn Europe, the pan-European FTSEurofirst 300 index .FTEU3 rose 0.97 percent. Gains in the dollar helped Germany's dollar-exposed DAX .GDAXI leap from a two-month low, up 1.5 percent. The dollar rose against a basket of currencies after the tax package moved forward. The dollar index .DXY rose 0.37 percent, with the euro EUR= down 0.34 percent to $1.1849. The Japanese yen weakened 0.58 percent versus the greenback at 112.78 per dollar. “Dollar bulls are pinning their hopes on the sweeping tax deal leading to a more rapid pace of interest rate hikes from the Federal Reserve,” said Jake Spark, U.S. corporate hedging manager at Western Union Business Solutions, in Washington. Benchmark 10-year notes US10YT=RR last fell 6/32 in price to yield 2.383 percent, from 2.363 percent late on Friday. Oil fell on profit-taking as the market eyed signs of rising U.S. production, though prices remained close to recent two-year highs thanks to last week’s decision by OPEC and other producers to extend output cuts. U.S. crude CLcv1 fell 1.56 percent to $57.45 per barrel and Brent LCOcv1 was last at $62.59, down 1.79 percent on the day. Gold prices fell toward the roughly four-week lows hit last week as the dollar strengthened. Spot gold XAU= dropped 0.5 percent to $1,274.11 an ounce.
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Published Date: Dec 05, 2017 12:45 am | Updated Date: Dec 05, 2017 12:45 am
