SYDNEY, Nov 3 2017 : Asian shares took a breather today as investors gave a guarded reception to Republican plans for massive U.S. tax cuts, while welcoming the appointment of a centrist at the helm of the Federal Reserve.
Apple’s stock (AAPL.O) reached new heights after it forecast holiday sales would beat market expectations, a likely positive for its many suppliers scattered across Asia.
A holiday in Japan kept volumes light, while investors observed the usual caution ahead of the U.S. payrolls report which is expected to show a big bounce back from September’s hurricane-hit result.
MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.15 percent, to be just a whisker from its highest since late 2007.
Australia’s main index firmed 0.6 percent, while China’s blue chips .CSI300 were a fraction softer.
News that Federal Reserve Governor Jerome Powell would be the new head of the U.S. central bank was well flagged, but still something of a relief.
In Washington, House Republicans finally unveiled long-delayed plans for deep tax cuts that President Donald Trump has promised, setting off a frantic race in Congress to give him his first major legislative victory.
Passage of legislation that mainly favors corporations and the wealthy was far from certain, and some business groups quickly came out against it.
“The tax package will undergo several re-writes and given the contentious debate on day one the final version is likely to be delayed and will be smaller in scope,” said Richard Franulovich, an economist at Westpac.
“The market reaction to the tax plan details has been equally lukewarm.”
Housing stocks also slid amid concerns over the tax plan’s cap on deductions for mortgages.
Currency investors were equally underwhelmed, leaving the U.S. dollar flat against most peers as Treasury yields dipped. Against a basket of currencies it was stuck at 94.672 after a week of narrow range-trading.
It was also steady on the yen at 114.00 JPY= having repeatedly failed to break resistance in the 114.28/45 zone.
Not so steady was sterling, which took a hammering overnight when the Bank of England hiked rates for the first time in a decade but said further moves would be “very gradual”.
In commodity markets, spot gold was steady at $1,276.36 an ounce, after touching the highest since Oct. 20 at$1,284.10 yesterday.
Oil prices edged back up toward recent two-year peaks as OPEC-led output cuts tightened supplies and drained inventories.
Brent crude gained 23 cents to $60.85 per barrel. The benchmark hit $61.70 on Wednesday, its highest since July 2015. U.S. crude added 26 cents to $54.80, almost 30 percent above its June lows. – Reuters