Global Markets Rise to Begin the Week -- Update
December 17 2017 - 10:52PM
Dow Jones News
By Kenan Machado
Financial stocks drove gains in Japan and Australia on Monday as
investors reacted to prospects of a completed tax bill getting
through Congress this week.
Bitcoin was again in focus, as trading began for the
cryptocurrency on the world's largest futures exchange.
Futures prices were initially above $20,000 on the CME before
pulling back, and bitcoin itself slumped in Monday morning Asian
trading, according to CoinDesk. It was recently around $18,400,
versus $19,500 just before futures trading started.
Financial stocks got a boost after Republicans released the
tax-reform proposal they plan to put up for a final vote this week,
which helped U.S. stocks hit fresh record highs on Friday.
The Nikkei ended morning trading up 2%, aided by 2% gains for
some major financial stocks. Meanwhile, the yen gave back some of
last week's strength, with the U.S. dollar around Yen112.65 versus
Yen112.25 at the end of local stock trading Friday.
"Investors are focusing on the tax reforms in the U.S. as that
will help its GDP grow," said Hisao Matsuura, chief strategist at
Nomura in Japan. In turn, that should help firms exporting to the
U.S., he added.
Construction-equipment maker stocks were strong Monday morning,
with Komatsu rising 1.9%.
Meanwhile, Australia's S&P/ASX 200 moved toward 10-year
highs with a 0.7% increase. Australia & New Zealand Banking and
Macquarie each gained nearly 2% while mining stocks also rose more
than 1%.
The Republican tax proposal would eliminate the tax on profits
made outside the U.S. and have companies pay a levy on earnings
currently offshore at a much-reduced rate. The current policy has
resulted in American companies leaving nearly $1.9 trillion abroad,
according to Moody's Investors Service.
Tax experts say companies would bring to the U.S. much of their
overseas cash if the rate is cut.
"Christmas will come early if the tax reforms translate to
legislation," said Shane Chanel, an equities and derivatives
adviser at ASR Wealth Advisers.
Stocks in much of the rest of Asia Pacific were little changed,
though Hong Kong's Hang Seng Index was up 0.4% amid support from
financial stocks there as well.
Oil futures were slightly higher in Asian trading.
S&P 500 futures were recently up 0.2%.
Some said profit-taking to end 2017 may not be as consequential
as it has been in years past.
"These 'Santa rallies' could be shallow given details of the
'compromise' tax bill have been suggested (and arguably digested)
by the markets for some time now," said Vishnu Varathan, head of
economics and strategy at Mizuho Bank.
Mr. Matsuura from Nomura said end-of-the-week profit-taking by
investors ahead of the holidays wouldn't come as a surprise.
Meanwhile, investors are awaiting election results from two
states in India. Exit-poll data on Friday indicated Prime Minister
Narendra Modi would solidify his position there, which led to
rallies in stocks and the rupee.
Write to Kenan Machado at kenan.machado@wsj.com
(END) Dow Jones Newswires
December 17, 2017 22:37 ET (03:37 GMT)
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