Stock markets down, US tax cuts head for Trump’s desk
New York, United States | AFP – US and European stock markets fell Wednesday as investors paused for breath following recent gains, with a long-awaited US tax cut plan moving near the finish line.
Equities have been on a broad upswing since last week when holdout Republican senators said they would back President Donald Trump’s signature tax legislation. The American leader has promised the reform will further fire up an already healthy US economy.
The House of Representatives voted along party lines to greenlight the $1.5 trillion overhaul, hours after the Senate narrowly passed the deal.
"We are making America great again," Trump bellowed to Republican lawmakers assembled on the South Lawn of the White House to celebrate the victory.
The declines in stocks followed numerous market records in recent weeks in anticipation of the massive tax cut seen as a boon for companies.
"With equity markets having risen more than 25 percent since Trump’s election victory, at least in part due to his tax reform plans, it’s likely that this is almost entirely priced in at this point," Oanda analyst Craig Erlam said.
"It will be interesting to see whether the rally can now be maintained until the end of the year, or whether the Santa rally will instead grind to a premature halt as investors lock in some profits."
IG analyst Chris Beauchamp also said it was no surprise "that markets are not exactly going crazy with excitement, since all the fun had been priced in."
In New York, the broad S&P 500 shed 0.1 percent, while in European markets, London stocks ended the session 0.3 percent lower, Paris shed 0.6 percent and Frankfurt was down by 1.1 percent.
A market note from Schwab said the declines in Europe came as "UK Brexit uncertainty continued to fester" and amid "caution in Spain ahead of tomorrow’s Catalan vote."
The dollar had a mixed session, advancing against the pound and yen, but dipping against the euro.
Oil prices rose after a US petroleum inventory report showed a decline in stockpiles. Petroleum-linked shares also rose, with Halliburton surging 3.4 percent, Dow member Chevron 0.9 percent and Devon Energy 3.0 percent.