Tax-cut elation returns to Wall Street, lifting Europe
New York, United States | AFP – Wall Street broke a two-day losing streak on Thursday, as US stocks resumed rising on the passage of sweeping tax cuts, helping to lift European markets in the process.
And after a long period in the doldrums, the energy sector showed strength as oil shares helped buoy the Dow Jones Industrial Average.
Tax-cut euphoria was again in the air. Credit Suisse lifted its 2018 forecast for the broader S&P 500 to 3,000, up from 2,875, citing the plunging corporate rates.
The Dow and S&P both gained 0.2 percent while the tech-heavy Nasdaq rose a tenth. Across the Atlantic, Frankfurt and Paris reversed an early losses, while London built on earlier modest gains to strike a new all-time high above 7,600 points.
"The bullish sentiment has returned to Wall Street somewhat as traders picked up some of the stocks that retreated on the back of the tax reforms being passed," said market analyst David Madden at CMC Markets UK.
Global equities have had a good year, with Wall Street enjoying a record-breaking run in anticipation of business-friendly tax reform.
Those gains increased over the past week as it became clear that months of bargaining would bear fruit following the successful passage of the Republican tax bill.
In the US, Wall Street has viewed the controversial $1.5 trillion tax overhaul as President Donald Trump’s most important priority. But now that it is near to being signed into law in coming weeks, investors may look to take profits out of the buoyant market.
"President Trump finally has a piece of legislation passed. There has already been a lot of optimism priced in," said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers.
"We may see a bit of profit-taking coming into the back end of the year."
The FTSE 100 ended the day with a gain of nearly 1.1 percent to 7,603.98 points.
"The FTSE 100 is the standout performer in Europe," said CMC Markets UK’s David Madden.
In Asia, Tokyo ended 0.1 percent lower but Hong Kong rose 0.5 percent and Shanghai gained 0.4 percent higher as dealers welcomed a pledge by China’s leaders to boost imports.