Stocks gain on US tax plan, dollar sinks, Treasuries decline

Bloomberg

Stocks kicked off the penultimate week of the year on a positive note after Republicans reached an agreement on the shape of US tax cuts. The dollar dropped and Treasuries headed lower.
The S&P 500 Index rose to new highs Monday, and the KBW bank index rose to its highest since October 2007, as investors focussed on the progress of proposed tax legislation. Midweek votes in the US House of Representatives and Senate are planned on a measure that will reduce corporate and individual tax rates. Lawmakers are aiming for the bill to land on President Donald Trump’s desk for a signature before Christmas.
“You look around the world and most countries are not just growing but enduring accelerated growth,” James Solloway, senior portfolio strategist at SEI Investments, said. “In the US, we don’t just have that going for us, but it also looks like it’s going to be a certainty that we’re going to have tax cuts, and a certain amount of tax reform that will be positive for corporations especially.”
The Stoxx Europe 600 Index climbed the most in seven weeks as real estate, automakers and technology stocks led gains. Sterling advanced as UK Prime Minister Theresa May addressed Parliament about her plans for Brexit. The euro strengthened after two days of declines.
Indian shares rebounded as PM Narendra Modi’s party looked set to return to power in his home state, an election that’s considered a bellwether before the vote in 2019. South Africa’s rand rose on optimism Cyril Ramaphosa will become the next leader of the ruling African National Congress party.
Elsewhere, oil extended gains toward $58 a barrel as US drillers targeting crude reduced their rig count for the first time in four weeks. Bitcoin traded above $18,000 as futures trading debuted on the CME Group Inc.’s venue, the world’s biggest exchange, giving the cryptocurrency further cachet and access to mainstream investors.
UK PM Theresa May will meet her cabinet on Tuesday to begin work on a trade wish list. Europe will unveil its stance on Wednesday. The disruption to the Forties oil pipeline is key for commodities traders this week. Details about the extent of the damage and a restart date could come at any time. The US and UK publish updated estimates of third-quarter GDP. The Bank of Japan meets to set monetary policy.
The S&P 500 Index gained 0.6 percent as of 11:30 am New York time. The Stoxx Europe 600 Index climbed 1.2 percent to the highest in almost six weeks. The UK’s FTSE 100 Index gained 0.6 percent to the highest in six weeks. Germany’s DAX Index rose 1.6 percent. The MSCI Emerging Market Index rose 1.1 percent.
The Bloomberg Dollar Spot Index declined 0.3 percent. The euro rose 0.5 percent to $1.1804. The British pound climbed 0.6 percent to $1.3398. The Japanese yen increased 0.2 percent to 112.35 per dollar.