US step towards tax reform helps equities across world
October 21 2017 12:48 AM
The Euronext logo is seen on the exterior of the Paris Stock Exchange. The CAC 40 closed 0.08% up at 5,372.38 points yesterday.


Equities across the globe got a boost yesterday from US lawmakers taking a step towards enacting the tax reform plan sought by President Donald Trump.
The adoption late on Thursday by US senators of a budget resolution will ease the path of tax reform measures, helping Tokyo extend its record-winning streak.
That provided a positive start to Europe, where EU leaders throwing British Prime Minister Theresa May a lifeline in Brexit talks also helped improve sentiment.
The gains largely evaporated at the close.
Frankfurt ended flat after car shares skidded on a raid by EU anti-trust investigators at BMW.
Wall Street pushed higher as investors welcomed the movement forward on tax reform, with the Dow up 0.4% approaching midday.
“Optimism over some form of tax reform in the US has waxed and waned constantly since the beginning of the year, and while there still remains some way to go before a plan passes the house, the fact that some progress on a blueprint has taken place, can be seen as progress,” said Michael Hewson, chief market analyst at CMC Markets UK.
Senators agreed a budget resolution that unlocks a procedure allowing Republicans to push through such measures with a simple majority vote, which means they won’t need votes from Democrats.
Trump hailed the vote as “an important step in advancing the administration’s pro-growth and pro-jobs legislative agenda”.
Expectations of the tycoon’s tax cuts and big spending plans would boost the economy were one of the drivers of a months-long global markets rally that kicked off after his November election, though a series of White House crises and legislative setbacks pared those gains.
While the controversial proposals still have a long way to go before being passed, the news spurred Asian markets to life yesterday after a plodding start to the day, while the dollar strengthened against the yen as well as the euro.
In Europe, EU leaders agreed to start preparations for the next stage of negotiations with Britain over Brexit.
As expected, the other 27 leaders agreed there had been insufficient progress on the divorce talks to officially move on to the future relationship with Britain, but still approved the start of internal preparations for post-Brexit trade and a transition deal.
The apparent softening of the EU’s position helped boost the pound.
Meanwhile, Spain’s IBEX 35 index added 0.3% to 10,222.7 points although tensions over Catalonia still ran high as Madrid prepared to seize powers from the regional government.
London’s FTSE 100 and Frankfurt’s DAX 30 were flat at 7,523.23 points and 12,991.28 points respectively.
Paris’ CAC 40 closed 0.08% up at 5,372.38 points, while the EURO STOXX 50 ended the day 0.06% up at 3,604.27 points.

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