World stock markets and the US dollar edged lower yesterday on signs that US tax reforms could be delayed after Senate Republicans offered a plan that differed significantly from the House of Representatives’ version.
MSCI’s global stock index, which tracks shares in 47 countries, declined 0.2 per cent, slipping further from a record level. On Thursday, the global index fell 0.4 per cent following 10 straight days of gains.
“The pause that the market is currently in is directly related to what’s going on from a tax standpoint,” said Jim McDonald, chief investment strategist for Northern Trust Corp .
The MSCI world index has surged more than 20 per cent so far this year, and some investors believe a pullback is due.
The hiatus over tax reforms weighed on the US dollar. The dollar index, which tracks the unit against six key world currencies, fell 0.1 per cent, and is set for its biggest weekly drop in four weeks.
Wall Street retreated on concern over delays in corporate tax cuts, though a rise in media stocks limited the slide.
The Dow Jones Industrial Average fell 41.17 points, or 0.18 per cent, to 23,420.77, the S&P 500 lost 5.45 points, or 0.21 per cent, to 2,579.17 and the Nasdaq Composite dropped 7.84 points, or 0.12 per cent, to 6,742.21.
The pan-European STOXX 600 index was on track for its worst week in three months, down 0.2 per cent yesterday and falling for a fourth day in row.
US Republican senators said they wanted to slash the corporate tax rate in 2019, later than the House’s proposed schedule of 2018, complicating a push for the biggest overhaul of US tax law since the 1980s.
The House was set to vote on its measure next week. But the Senate’s timetable was less clear.
The yield on Germany’s 10-year government bond, the benchmark for the bloc, hit 0.40 per cent for the first time since October 27.
In the currency market, the euro up 0.17 per cent to $1.166.
The Japanese yen strengthened 0.15 per cent versus the greenback at 113.32 per dollar.
Oil prices steadied on expectations of supply cuts by major exporters and concern about political developments in Saudi Arabia.
US crude rose 0.28 per cent to $57.33 per barrel and Brent was last at $64.21, up 0.44 per cent on the day.