Stocks rose around the world while government bonds slumped as a promise by U.S. President Donald Trump to overhaul business taxes emboldened investors.
Equity markets in Europe and Asia advanced, sending the MSCI All-Country World Index to the highest level since June 2015, after U.S. stocks climbed to records. The dollar headed for its first weekly gain of the year and Treasuries and gold retreated. Crude extended a rally to a third day.
The pledge by Trump helped restore faith in reflation trades as long-awaited details on pro-growth policies remain undelivered, rekindling a global stock rally that had been doused by a controversy over the White House’s immigration policies and rising election risk in Europe. Trump said a “phenomenal” plan to overhaul business taxes may be released within the next “two or three weeks.”
“The outlook for the U.S. is quite positive and that’s pretty good for the U.S. and for equity markets globally,” Michael Bell, a global market strategist at JPMorgan Asset Management, told Bloomberg TV on Friday. “Imagine you get a corporate tax cut down to around 20 percent compared with the average of about 35 percent at the moment, that has a hugely positive impact on earnings.”
What’s coming up in the markets:
Moody’s Investors Service is due to weigh in on the creditworthiness of France and Italy. Greece’s creditors may present the government as soon as today with a framework of fiscal measures equal to as much as 2% of GDP in a bid to revive the country’s stalled bailout, people familiar said. The International Energy Agency and OPEC monthly reports are due on Friday and Monday, respectively, providing the first full month of production data since the oil cartel’s supply deal. Attention turns to Shinzo Abe’s visit to Washington, as investors parse reports Japan’s prime minister is prepared to offer infrastructure investment, with the U.S. administration still sitting on details of its own policy proposal. Trump appears set to go to the Supreme Court over his ban on immigration after a San Francisco-based appeals court upheld a suspension of the order. (dan)
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