World markets climb along with the dollar and US bond yields
New York — World stocks climbed, along with the US dollar and bond yields on Friday, as investors anticipated US President Donald Trump could make progress on his fiscal plans after the US Senate approved a budget blueprint that paves the way for tax cuts.
US Republican senator Rand Paul appeared to back the administration’s sweeping tax cut plan, saying he was "all in" for enormous tax cuts, even as the Senate passed a key budget measure without his support one day earlier.
Equities rose on Wall Street, with financials — expected to benefit from the administration’s proposed policies — up 1% as the best performer of 11 major S&P sectors. But gains were curbed by declines in healthcare stocks, off 0.1%, and General Electric, which lost 2.1% after its third-quarter results and forecast cut.
"Investors need to see more than some progress, investors need to see a higher degree of certainty that there is a tradable narrative underpinning the market," said Peter Kenny, senior market strategist at Global Markets Advisory Group in New York. "Investors are only willing to put so much capital at risk with the assumption that better days are ahead when it comes to tax reform."
The Dow Jones Industrial Average rose 104.13 points, or 0.45%, to 23,267.17, the S&P 500 gained 8.34 points, or 0.33%, to 2,570.44 and the Nasdaq Composite added 25.74 points, or 0.39%, to 6,630.80.
The dollar index, tracking the greenback against a basket of major currencies, rose 0.52%, with the euro down 0.7% to $1.1767.
Bets that Trump’s planned tax cuts, infrastructure spending and other pro-business measures would push up growth and inflation had been behind a reflation trade that propelled the dollar to 14-year highs earlier this year.
European shares rebounded from their worst day in two months, also helped by well-received earnings reports for Volvo and Ericsson and high German producer-price inflation numbers. The pan-European FTSEurofirst 300 index rose 0.18%. MSCI’s world equity index, which tracks shares in 47 countries, gained 0.01% and was edging towards record highs.
The Senate budget resolution also sent US treasury yields higher, with two-year yields reaching a near nine-year high, as investors reduced bond holdings on worries about more inflation and federal borrowing. Benchmark 10-year notes last fell 19/32 in price to yield 2.3899%, from 2.321% late on Thursday.
The increased risk appetite also sent gold lower. Spot gold dropped 0.8% to $1,279.25 an ounce. US gold futures fell 0.71% to $1,280.80 an ounce.
US crude rose 0.19% to $51.61 a barrel and Brent was last at $57.51, up 0.49% on the day. Still, oil was set for a weekly loss as investors sought to book profit, despite tensions in the Middle East that have slashed supplies of crude.