Wall St trips on tax reform roadblocks, Disney and Fox boosted by $68b deal
Updated
A gloomy night in overseas stock trading is likely to flow towards the Australian share market today.
Investor sentiment stumbled over potential roadblocks to the Republicans' tax overhaul.
This was despite Congressional Republicans reaching a deal on the final form of the tax bill on Wednesday.
Market snapshot at 8:45am (AEDT):
- ASX SPI 200 futures -0.1pc at 6,010, ASX 200 (Thursday's close) +0.1pc at 6,011
- AUD: 76.64 US cents, 57.06 British pence, 65.06 Euro cents, 86.1 Japanese yen, $NZ1.10
- US: Dow Jones -0.3pc at 24,509, S&P 500 -0.4pc at 2,652, Nasdaq -0.3pc at 6,857
- Europe: FTSE -0.7pc at 7,448, DAX -0.4pc at 13,069, Euro Stoxx 50 -0.5pc at 3,562
- Commodities: Brent crude +1.5pc at $US63.39/barrel, spot gold -0.2pc at $US1,252.88/ounce, iron ore -0.9pc at $US69.94/tonne
Republican tax woes
Republican Senators Marco Rubio and Mike Lee said they do not support the bill in its current form.
Mr Rubio told reporters that if the bill's proposed tax refunds related to the child tax credit is not expanded: "I'm a no...It has to be higher than $1,100."
The child tax credit in the US tax code is meant to lower the tax bills of working families with children.
Mr Lee's spokesman, Conn Carroll, said in an interview with Reuters that the senator is now "undecided on the tax bill as currently written".
Equity investors are concerned that stocks could tumble if the bill, which includes slashing corporate taxes, fails.
More than 75 per cent of stocks on the S&P 500 traded lower, while most sectors fell into negative territory.
Media deal fails to offset broader losses
However, some of the best performing stocks on the S&P were 21st Century Fox and Disney.
Fox's share price jumped by 5.8 per cent after Disney struck a deal to buy the film and TV businesses of Rupert Murdoch's media empire for $68 billion ($US52.4 billion) in stock.
This deal would strengthen Disney's plans to create its own streaming service, potentially making it an even bigger threat to Netflix.
Disney shares rose by 2.7 per cent following this development.
The lift in the two media giants' stock values made consumer cyclicals the best performing S&P sector (+0.3pc).
The only other sector to post gains was technology, which rose by a tepid 0.04 per cent.
Aussie dollar surges
The Australian dollar has continued to surge, and has lifted by 0.5 per cent to 76.7 US cents.
It has also lifted against the British pound (+0.4pc), euro (+0.8pc), Japanese yen (+0.2pc) and New Zealand dollar (+1pc).
The local currency lifted ahead of the Federal Reserve's decision to lift US interest rates, and continued to soar following Thursday's stronger-than-expected job figures from the ABS.
Overnight, the Australian dollar was particularly strong against European currencies.
The Bank of England and European Central Bank held their respective policy meetings overnight, and decided to keep interest rates on hold.
However, the ECB sent mixed signals — pledging to keep printing more money for as long as necessary, yet upgrading its economic growth forecasts.
The ECB now expects the eurozone's economy to grow 2.4 per cent this year, but admitted it would not hit its inflation target by 2020.
Topics: stockmarket, company-news, economic-trends, currency, australia
First posted
