Wall Street stocks spring up to fresh highs as US tax vote looms this week

Wall Street and other major world stock markets hit fresh highs on Monday as US Republican lawmakers moved closer to passing tax-cut legislation, while the dollar slid on scepticism about the bill’s impact on economic growth.

Congress was expected to vote as early as Tuesday on the bill, which would become the biggest US tax code overhaul in more than three decades if approved. President Donald Trump is aiming to sign the plan into law at the end of the week.

The plan would lower the corporate income tax rate to 21 per cent from 35 per cent, which analysts say would likely increase profits, buy-backs and dividend payouts.

Wall Street’s leading stock indexes closed at all-time highs ahead of a potential vote.

The Dow Jones Industrial Average rose 140.46 points, or 0.57 per cent, to end at 24,792.2, the S&P 500 gained 14.35 points, or 0.54 per cent, to 2,690.16 and the Nasdaq Composite added 58.18 points, or 0.84 per cent, to 6,994.76, after rising above 7,000 points for the first time.

The benchmark MSCI World index, which tracks stocks around the globe, gained 0.91 per cent to a new high. The pan-European FTSEurofirst 300 index rose 1.18 per cent.

A potential flurry of mergers and acquisitions, seen as another by-product of the tax plan, also pushed stocks higher, analysts said.

Meanwhile, the dollar index fell 0.24 per cent after inching up following the tax plan’s latest advancement late last week.

US currency traders began to doubt how impactful the pro-growth bill could be and grew sceptical about whether it would create enough growth to accelerate interest rate increases by the Federal Reserve. The market currently sees two more rate increases in the coming year while the US central bank itself anticipates three.

“Even a passage of the bill by the year’s end could have a limited impact on the dollar as investors are increasingly sceptical of the sustained positive impact the rushed bill will have on the economy,” said Omer Esiner, chief market analyst at Commonwealth FX in Washington.

The euro, benefiting from the dollar’s slump, was up 0.25 per cent to US$1.1781.

The dollar’s weakening propelled gold higher as the dollar-denominated bullion became cheaper for buyers using other currencies.

Spot gold added 0.5 per cent to US$1,261.50 an ounce. US gold futures gained 0.57 per cent to US$1,264.70.

The margin between US shorter-dated and longer-dated Treasury yields widened on Monday from its slimmest in a decade as traders booked profits on curve-flattening positions tied to the view the Fed would raise rates further.

Oil prices rose amid an ongoing North Sea pipeline outage and as a strike by Nigerian oil workers threatened the country’s crude exports. Despite the respite for oil prices, growth in US crude output continued to dampen the market and limit gains.

US crude oil futures settled at US$57.16 a barrel, down 14 cents or 0.24 per cent. Brent crude futures settled at US$63.41, up 18 cents or 0.28 per cent.

Bitcoin was down 1.3 per cent to US$18,712.80 on the Bitstamp exchange after rising to a record of US$19,666 over the weekend, ahead of CME Group Inc’s launch of bitcoin futures on Sunday.