Business

Asian stocks slip as US tax doubts snap global winning streak

Japan Financial Markets

Syndicated News
Written by Syndicated News

TOKYO, Nov 10 2017 : Asian shares slipped today on uncertainty about U.S. tax reforms after Senate Republicans unveiled a plan that differed from the House of Representatives’ version in several key areas, including a delay in the timing of a corporate tax cut.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.1 percent while Japan’s Nikkei .N225 lost 1.0 percent.

MSCI’s all-country equity index posted its first daily loss in more than two weeks yesterday, ending its longest daily winning streak since 2003.

 On Wall Street, the S&P 500 .SPX lost 0.38 percent while the Nasdaq Composite .IXIC dropped 0.58 percent.

U.S. Republican Senators said they want to slash the corporate tax rate in 2019, later than the House’s proposed schedule of 2018, complicating a push for the biggest overhaul of U.S. tax law since the 1980s.

“Things look fluid, including on when the tax cut deal will be reached,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

“I would say a compromise will be reached in the end, and we don’t need to be too pessimistic. But if they indeed decide to delay the tax cut by a year, there is likely to be some disappointment,” he said.

The U.S. dollar also faced the head wind, with the euro EUR= firming to $1.1644, extending its rebound from $1.1553, its 3 1/2-month low touched on Tuesday.

The dollar slipped to 113.47 yen JPY=, from Monday’s high of 114.735, its highest level since March.

The 10-year U.S. Treasuries yield also briefly fell, though it came back to 2.340 percent, pressured by this week’s government and corporate debt supply.

U.S. junk bonds were sold off, with the price of major junk bond ETF (HYG) plunging to its lowest level since March.

Oil prices held firm, on course to log their fifth straight week of gains, on hopes of supply cuts by major exporters as well as continuing concern about political developments in Saudi Arabia.

A spokesman for Saudi Arabia’s energy ministry said the kingdom plans to cut crude exports by 120,000 barrels per day in December from November.

U.S. light crude futures traded at $57.04, down 0.2 percent in early Asian trade but still just shy of this week’s more than two-year high of $57.69 a barrel. – Reuters

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