BEIJING — Asian stock markets were mixed Tuesday after Wall Street gained on growing investor certainty U.S. lawmakers will approve tax changes.
KEEPING SCORE: The Shanghai Composite Index rose 0.6 per cent to 3,287.48 while Tokyo’s Nikkei 225 lost 0.1 per cent to 22,871.44. Hong Kong’s Hang Seng advanced 0.9 per cent to 29,311.37 and Seoul’s Kospi lost 0.2 per cent to 2,476.11. Sydney’s S&P-ASX 200 gained 0.5 per cent to 6,071.80 while benchmarks in New Zealand and Singapore also advanced. Taiwan fell while Southeast Asian bourses were mixed.
WALL STREET: Stocks in technology companies climbed, as did banks and retailers, which are likely to see lower taxes under proposed changes. Stocks have made hefty gains as congressional Republicans appeared to shore up enough support to approve the legislation; voting was scheduled to start Tuesday. The biggest gains have gone to companies that pay relatively higher tax rates, including smaller, U.S.-focused companies, banks and retailers. The Standard & Poor’s 500 index gained 0.5 per cent to 2,690.16. The Dow Jones industrial average advanced 0.6 per cent to 24,792.20. The Nasdaq composite rose 0.8 per cent to 6,994.76.
TAXES: Congressional Republicans appeared to garner enough support to approve changes that initially would cut taxes for most Americans but by 2027 would increase the burden for most. The House of Representatives was scheduled to vote Tuesday and the Senate on Wednesday. Most of the benefits go to businesses and the wealthy, which Republicans say would goose the economy and benefit all. The Congressional Budget Office estimates the cuts will widen the government’s budget deficit by $1.45 trillion.
ANALYST’S TAKE: The dollar weakened against other major currencies because “market participants doubt the impact on the economy,” said Mizuho Bank in a report. “Firstly, the tax bill is expected to widen fiscal deficit,” said Mizuho. “Secondly, the pro-cyclical nature of the fiscal impulse at a time when the economy is close to full employment also raises questions (about) the necessity of an expansionary fiscal stance at a ‘late cycle’ stage.”
SOUP & SNACKS: Two major food companies agreed to buy smaller snack makers: Campbell Soup plans to purchase pretzel maker Snyder’s-Lance for $4.87 billion and Hershey will buy Amplify Snack Brands for $1.2 billion.
CURRENCY: The dollar advanced to 112.61 yen from Monday’s 112.54 yen. The euro rose to $1.1793 from $1.1781.
ENERGY: Benchmark U.S. crude rose 14 cents to $57.36 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost 11 cents on Monday to $57.22. Brent crude, used to price international oils, added 13 cents to $63.54 in London. It added 18 cents the previous session.