Record stock runs continue on Trump tax cuts

Traders react on the floor of the New York Stock Exchange. (Reuters photo)

NEW YORK: Global stock markets rose on Monday, along with the dollar and Treasury yields, after a major US tax overhaul cleared an important hurdle.

Markets reacted strongly to the US Senate’s approval on Saturday of the biggest tax law change since the 1980s, taking President Donald Trump closer to his goal of slashing taxes on businesses.

On Wall Street, the benchmark S&P 500.SPX and Dow industrials.DJI rose to record highs, while MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 0.48% and hit an all-time peak.

“The big story is indeed the tax reform passage. Until fairly recently, markets were pretty sceptical about whether anything was actually going to happen,” said Brad McMillan, chief investment officer for Commonwealth Financial Network in Waltham, Massachusetts.

“This can have a meaningful impact on corporate earnings here in the US So you are largely seeing a repricing of the US markets based on that,” McMillan said.

The Republicans’ tax plan is expected to add $1.4 trillion over 10 years to the $20 trillion national debt to finance changes that they say would further boost an already growing economy.

By mid-afternoon, the Dow Jones Industrial Average .DJI rose 199.59 points, or 0.82%, to 24,431.18, the S&P 500 .SPX gained 14.62 points, or 0.55%, to 2,656.84 and the Nasdaq Composite .IXIC dropped 11.57 points, or 0.17%, to 6,836.02.

Some of the biggest gainers were from areas expected to benefit from a lower corporate tax rate. The S&P 500 banks index .SPXBK surged 3.0%, while the Dow Jones Transport Average .DJT jumped 2.8%.

“Financials should benefit from not only tax reform but as we start to see rates move higher, their interest margins become more profitable,” said Emily Roland, head of investment research at John Hancock Investments in Boston.

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