The benchmark US stock index Dow Jones Industrial Average (DJIA) topped the 21,000-level again yesterday riding on the back of strong corporate earnings, anticipated tax reforms by President Donald Trump, encouraging trends from the French presidential elections, and a bull run in the Asian equities markets.
The index, which first breached the 21,000 level on 1 March earlier this year, rose 0.35% intraday at the day’s high of 21,070.9, though remained short of touching the previous high of 21,169.11 points. However, It finally ended lower at 20,975.09 points, after the actual tax reform plan was unveiled, which offered no clarity on the funding the gap left by the proposed drastic tax reductions on companies and individuals.
The broader NASDAQ Composite index hit a fresh all-time high at 6,040.89 points before closing almost flat at 6,025.23 points. The yearly returns for the US indices, DJIA and NASDAQ yesterday stood at 16.59% and 23.26% respectively.
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The major contributors to the DJIA were American multinational conglomerate United Technologies Corp (up 1.37% at $118.47); telecom giant Verizon Communication Inc (up 1.3% at $47.31); home improvement supplier The Home Depot Inc (up 0.88% at $154.37); insurer and second largest writer of US commercial property The Travellers Companies Inc (up 0.79% at $122.28); world’s largest pharmaceutical company Merck & Co Inc (up 0.7% at $62.74); and retailing giant and world’s biggest operator of hypermarkets and grocery stores Walmart Stores Inc (up 0.68% at $75.56).
All major equities across the world market were trading higher on Wednesday, while the benchmark index Sensex of the oldest Asian stock exchange, Bombay Stock Exchange (BSE) made a record high breaching 30,100 points mark for the first time ever, closing at 30,133.35.
On the other hand, the European markets also fared well yesterday. The benchmark index FTSE 100 of the Financial Times Stock Exchange (FTSE) of the Britain closed higher, up 0.18% at 7288.72 points; the German index DAX also rose, closing marginally higher at 12,472.8 points; while the French benchmark index CAC 40 closed up 0.19% at 5287.87 points. The French index appreciated sharply earlier on Monday on the cues of the centrist candidate and market favorite Emmanuel Macron winning the first round of the French presidential election.
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Overall, first-quarter earnings for STOXX 600 companies were expected to rise 5.5 percent, Reuters said in a news report. In comparison, S&P 500 companies in the US are expected to show 11.4 percent earnings growth for the quarter. The euro was down 0.46 percent to $1.0875 after strengthening by more than 2 percent in the prior two sessions in the wake of the first round of French elections.
Trump tax reform
The US President Donald Trump proposed slashing tax rates for businesses and on overseas corporate profits returned to the country in a long-awaited plan greeted as an opening manoeuvre by his fellow Republicans in Congress. The plan would cut the income tax rate paid by public corporations to 15 percent from 35 and reduce the top tax rate assessed on pass-through businesses, including small partnerships and sole proprietorships, to 15 percent from 39.6, Reuters said in a report.
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Post the announcement of the tax reforms, the Dow Jones Industrial Average fell 21.03 points, or 0.1 percent, to end at 20,975.09, the S&P 500 lost 1.16 points, or 0.05 percent, to 2,387.45 and the Nasdaq Composite dropped 0.27 point to 6,025.23.
The Mexican peso weakened 1.85 percent versus the US dollar at 19.20 pesos while the Canadian dollar weakened 0.31 percent versus the greenback at 1.36 per US dollar. The main Mexican and Canadian share indexes both fell more than half a percent.