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Bloomberg
US stocks pared gains and small caps turned negative as the prospects for tax reform remain dimmed by political wrangling in Congress. The latest evidence that the global economy is on firm footing earlier boosted equities around the world and lifted the dollar.
The Russell 2000 Index slumped on speculation that failure to cut taxes would hit small companies hardest. The S&P 500 Index lost more than half of a gain that reached 0.5 percent. Earlier European equities hit a two-year high and share measures from Tokyo to Sydney climbed as corporate earnings poured in ahead of expectations. The dollar firmed after data showed companies added more workers than forecast to US payrolls in October. Oil fell after touching an eight-month high and nickel surged to the best since 2015.
US equity markets continue to react to the tax plan as its prospects ebb and wax from headline to headline. Trump has insisted that the legislation be passed before Thanksgiving. Meanwhile, central banks continue to demand investor attention. An announcement on who will helm the central bank is due by the end of the week, with current board member Jerome Powell said to have the edge over John Taylor. The Bank of England will probably lift borrowing costs for the first time in a decade.
One potential threat to the markets’ risk-on mood could come from the unfolding investigation by Special Counsel Robert Mueller into Russia’s meddling in last year’s presidential campaign.
Elsewhere, bitcoin extended gains to yet another record in the wake of the announcement from CME Group, the world’s biggest exchange operator, that it plans to launch futures trading on the cryptocurrency by year-end. The US October payroll report comes out on Friday. Trump starts an 11-day trip to Asia, his first as president, on Friday. A probable Bank of England rate hike on Thursday will be the first in a decade.
The S&P 500 rose 0.2 percent to 2,580.17 as of 11:53 am in New York. The Dow Jones Industrial Average added 0.6 percent to a fresh record. The Stoxx Europe 600 Index advanced 0.7 percent to the highest in more than two years. Germany’s DAX Index advanced 1.9 percent to the highest on record. Japan’s Nikkei 225 Stock Average climbed 1.9 percent to the highest in more than 21 years. The MSCI Asia Pacific Index climbed 0.9 percent to the highest in about 10 years. The MSCI Emerging Market Index jumped 0.9 percent to the highest in more than two weeks.
The Bloomberg Dollar Spot Index advanced 0.1 percent. The euro fell 0.3 percent to $1.1615. The British pound increased less than 0.05 percent to $1.3288, the strongest in more than a month. The Japanese yen decreased 0.5 percent to 114.20 per dollar, the weakest in about six months.
The yield on 10-year Treasuries fell two basis points to 2.36 percent. Germany’s 10-year yield advanced two basis points to 0.38 percent. Japan’s 10-year yield declined one basis point to 0.061 percent, the lowest in more than three weeks. Gold futures increased 0.6 percent to $1,278.50 an ounce.