Tax-Bill Momentum Boosts Global Shares

By David HodariFeaturesDow Jones Newswires

European stocks make broad opening gains

-- Tech weakness weighs in Asia-Pacific

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-- Markets retain tax cut momentum

European stocks edged up Tuesday, following gains in most Asia-Pacific markets and in the U.S. amid the increasing likelihood of an overhaul of the U.S. tax code.

The Stoxx Europe 600 was up 0.2% in morning trading, with the euro gaining 0.2% to $1.1807.

South African companies listed in Europe were among the sharpest gainers after pro-business, anticorruption candidate Cyril Ramaphosa on Monday was elected leader of the country's ruling African National Congress.

Steinhoff International Holdings was up 5%, and Old Mutual gained 4.1%, helped by the divestiture of an asset-management unit.

The Stoxx Europe 600's gains were broad-based with the index's heath care, industrial goods, and household goods sectors all ticking 0.3% higher.

German 10-year bond yields moved up to 0.309% from 0.304% late Monday. Yields move inversely to prices.

That general optimism came after gains in Asia-Pacific on Tuesday and the U.S. on Monday, amid shrinking preholiday trade volumes and the growing probability that Republican leaders will succeed in changing the U.S. tax code before the new year.

House Republicans will vote on Tuesday on the sweeping rewrite of the U.S. tax code, which would reduce taxes by $1.5 trillion over 10 years, with the Senate expected to follow later Tuesday or Wednesday.

The plan would cut the corporate rate to 21% next year from a top rate of 35% and lower the top individual tax rate by 2%.

While the House was expected to pass the bill by a comfortable margin, stocks had yet to price in the full expected impact of the legislative change, said Ben Laidler, global equities strategist at HSBC.

"There'll be some movement the more likely it becomes. The S&P's done well and that tells you it's not been priced in yet. The tax cuts could add 7% to large cap earnings, double that to small cap earnings... and tax reform should extend this earnings cycle," Mr. Laidler said.

U.S. 10-year government bond yields edged down to 2.391% from 2.392% late Monday.

Australia's benchmark closed 0.5% higher, hitting a fresh 10-year high. New Zealand's NZX 50 climbed 0.8%.

Hong Kong's Hang Seng Index returned to positive territory for December, rising 0.9%, with influential tech heavyweight Tencent Holdings up 1.9%. In China, both the Shanghai Composite and the Shenzhen Composite rose 0.9%.

Some Asian indexes, however, continued to show the strain of continued tech-sector weakness.

Taiwan's Taiex closed 0.4% lower, dragged lower by Apple Inc. suppliers Largan Precision and Foxconn Technology, down 2.9% and 1.1% respectively.

Japan's Nikkei was last down 0.2%, with Sony 0.9% lower and Nintendo falling 0.8%. Similarly, Korea's Kospi edged 0.1% lower and Malaysia's benchmark ticked down 0.8%.

Bitcoin was last down 1.04% at $18,763, according to CoinDesk, following an early-week fall amid the launch of CME futures trading.

Gregor Stuart Hunter contributed to this article.

Write to David Hodari at

(END) Dow Jones Newswires

December 19, 2017 04:08 ET (09:08 GMT)