US and European equities rose on Wednesday at the unveiling of President Donald Trump’s tax plan, long seen as Wall Street’s biggest priority in the Washington growth agenda.
Developed in tandem with Republican congressional leaders, the tax reform calls for slashing the US corporate rate to 20 percent from 35 percent, and offers tax relief to companies to bring earnings back to the United States from abroad.
The policy is expected to be significantly overhauled as it moves through Capitol Hill.
While Trump’s efforts to reform the American health care system have fizzled, Wall Street’s gains Wednesday suggested optimism on the prospects for the tax cuts.
“This is a once-in-a-lifetime opportunity that is all about more jobs, fairer taxes and bigger pay checks for American families,” US House Speaker Paul Ryan said.
Leading US stock indices moved higher, with the Nasdaq jumping 1.2 percent to within few points of an all-time high.
Equity markets in London, France and Germany all gained, while bourses in Asia were mixed as US-North Korea tensions continue to jangle nerves and keep investors from buying with any conviction.
Leading analysts have given the Trump tax plan about a 50 percent chance of becoming law in some form, said Quincy Krosby, chief market strategist at Prudential Annuities.
“The question becomes, how are you going to pay for it?” Krosby said, adding that some fiscally conservative Republicans may not go along
And Joshua Mahony, market analyst at online trading firm IG, said, “While the prospect of lower taxes promises a bounty for stocks, it is worth noting that Trump has yet to deliver on any major policies given the constant rebuttals from the Republican-dominated Congress.”
“There is a good chance that these tax reforms are going to be as difficult to pass as the health reforms.”
In European trading, shares in Alstom were among the strongest performers with a gain of 4.3 percent to close at 35.07 euros on news of the merger of its rail activities with German industrial giant Siemens.
Siemens’ stock meanwhile won 1.2 percent to 117.95 euros.
Shares in Ryanair gained more than 3.4 percent in Dublin to 16.99 euros after the low-cost airline announced more flight cancellations and the abandonment of its bid for Italy’s Alitalia as it sought to overcome its pilot shortage.
Dow member Nike dropped 1.9 percent after reporting a 24 percent decline in first-quarter profits to $950 million due in part to sluggish sales in North America.
– Key figures around 2040 GMT –
New York – DOW: UP 0.3 percent at 22,340.71 (close)
New York – S&P 500: UP 0.4 percent at 2,507.04 (close)
New York – Nasdaq: 1.2 percent at 6,453.26 (close)
London – FTSE 100: UP 0.4 percent at 7,313.51 (close)
Frankfurt – DAX 30: UP 0.4 percent at 12,657.41 (close)
Paris – CAC 40: UP 0.3 percent at 5,281.96 (close)
EURO STOXX 50: UP 0.6 percent at 3,557.52
Tokyo – Nikkei 225: DOWN 0.3 percent at 20,267.05 (close)
Hong Kong – Hang Seng: UP 0.5 percent at 27,642.43 (close)
Shanghai – Composite: UP 0.1 percent at 3,345.27 (close)
Euro/dollar: DOWN at $1.1745 from $1.1790
Dollar/yen: UP at 112.79 yen from 112.25 yen
Pound/dollar: DOWN at $1.3387 from $1.3456
Oil – Brent North Sea: DOWN 54 cents at $57.90 per barrel
Oil – West Texas Intermediate: UP 26 cents at $52.14 per barrel