Thursday 20 September 2018

Markets down on US tax and BoE news

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)

Chuck Mikolajczak/Reuters

World stock markets edged lower yesterday, with Wall Street slightly down and the US dollar modestly weaker after details of a Republican tax plan were released, while sterling dropped after the Bank of England's policy announcement.

The Republican tax plan called for a swath of changes to the US tax code, including slashing the corporate tax rate and reducing the number of tax brackets for individuals.

"There is a lot of hope built into this market right now that is probably a little bit too much optimism based on how the economy is going to grow this year and next," said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St Louis.

"So I don't have a lot of faith in Washington this is going to be the best package, but it will be a package."

Hopes for progress on tax reform and a solid earnings season helped push the S&P 500 up 2.2pc in October. Apple, the largest US company by market capitalisation, will report results after the market closes.

The dollar fell to its lowest in a week against a basket of major currencies after the tax details were released.

The dollar index fell 0.09pc, with the euro up 0.33pc to $1.1655.

Sterling fell after the Bank of England raised interest rates for the first time in more than 10 years but said it expected only "very gradual" further increases over the next three years.

Sterling dropped 1.1pc and was on track for its biggest one-day drop since June, and Britain's main FTSE 100 stock index climbed 0.9pc.

The ISEQ Index was down 44.870 points to 6,965.72 at the close. Risers on the day included Smurfit Kappa. Laggards included Zamano and Amryst Pharma.

Irish Independent

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