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U.S. tax concerns ripple through global markets

U.S. tax concerns ripple through global markets

NEW YORK: Global markets remained under pressure Friday, following Wall Street lower on concerns over the U.S. tax-overhaul plan. Futures pointed to a 0.3% opening loss for the S&P 500. Wall Street closed in the red Thursday after Senate Republicans released a tax-reform proposal that delays cutting corporate rates until 2019.

The Senate plan to overhaul the U.S. tax code differs significantly from the House GOP’s in key areas such as the level of top individual tax rates and the timing of a corporate tax-rate cut. Differences among the two proposals caused some traders to question the ability of Republicans to get a bill through to the White House.

“Investors are slowly unwinding their expectations from the Trump tax bill,” said Margaret Yang, market analyst at CMC Markets. Given the significant run-up in global shares in the past few weeks, traders took cues to take profit, she said. U.S. stock indexes posted a trifecta of records earlier in the week as investors were encouraged by solid earnings. Some traders said profit growth will continue supporting equities.

“We remain pretty constructive on stocks overall. We think in the U.S. earnings are still pretty strong,” said Jeremy Bryan, portfolio manager at Gradient Investments.

The Stoxx Europe 600 was down 0.2% in early afternoon trade, led by losses in the automotive sector. European equities extended declines after suffering Thursday their largest percentage drop in more than four months.

“Yesterday we had a few companies that disappointed on earnings and as a result of that stocks came down and that kind of spooked the market a little bit,” said Chi Chan, lead portfolio manager at Hermes Eurozone Strategy.

Italian aerospace firm Leonardo SpA suffered the largest share-price drop Friday, falling 21% after it reported Thursday its third-quarter net profit fell 46% and it lowered its outlook for the year.

Mining and financial services stocks bucked the downbeat trend to post gains, after companies including ArcelorMittal reported earnings that beat expectations.

In the bond market, yields on 10-year Treasurys rose for a third consecutive day to 2.367% from 2.333% Thursday, according to Tradeweb. German bund yields edged up to 0.392% from 0.379%. Yields move inversely to prices.