BusinessDesk World Week Ahead: Will US Tax Bill Pass?

BusinessDesk World Week Ahead: Will US Tax Bill Pass?

Dec. 18 (BusinessDesk) - Wall Street starts the week at record highs as investors bet that the long-awaited US tax reform plan might be passed by Congress, and sent to the White House, as early as this week.

"Markets will be paying close attention to Washington in the first part of the week and the expected passage through the Senate of a unified tax bill," National Australia Bank said in a note on Friday. "Vice President [Mike] Pence has delayed a Middle East trip as he might be needed as the deciding Senate vote."

On Friday, the Dow Jones Industrial Average added 0.6 percent, the Standard & Poor’s 500 Index climbed 0.9 percent, while the Nasdaq Composite Index moved 1.2 percent higher. All three indexes closed at record highs amid optimism that the pending tax cuts will boost corporate profits and shareholder returns.

To be sure, the passage of the bill is not guaranteed.

“Some GOP Senators have wavered in their support and further delays could derail the bill's chance of passing as the GOP majority in the Senate will shrink in early January,” according to TD Securities in a note on Friday.

For the week, the Dow gained 1.3 percent, the S&P 500 increased 0.9 percent, while the Nasdaq rallied 1.4 percent.

“Congress still has a long to-do list before the holidays begin, with the leadership hoping to sign off on the tax reform package, and a bipartisan deal to prevent a partial government shutdown on the cards,” Capital Economics economist Michael Pearce said in a note on Friday.

The latest US economic data scheduled for release include the housing market index, due today; housing starts and current account, due Tuesday; existing home sales, due Wednesday; gross domestic product, weekly jobless claims, the Philadelphia Fed business outlook survey, the Chicago Fed national activity index, corporate profits, and FHFA house price index, due Thursday; and durable goods orders, personal income and outlays, new home sales, consumer sentiment, and the Kansas City Fed manufacturing index, due Friday.

“On the data front, the personal spending and durable goods figures for November should confirm that the economy is on track for another solid quarter of growth to end 2017,” according to Pearce.

In Europe, the Stoxx 600 Index ended Friday with a 0.2 percent decline from the previous day’s close.

Shares of Unilever closed 1.4 percent higher in London on Friday. The Anglo-Dutch consumer goods company said it agreed to sell its global margarine and spreads business, which includes brands such as Flora and Becel, to US buyout fund KKR for 6.8 billion euros (US$8 billion).

Completion is expected mid-2018, the companies said in a statement on Friday.

“After a long history in Unilever we decided that the future of the spreads business would lie outside the group,” Paul Polman, CEO of Unilever, said in the statement. “The announcement today marks a further step in reshaping and sharpening our portfolio for long-term growth.”

KKR’s purchase of the division is the biggest leveraged buyout announced in Europe this year, according to Bloomberg.

“Sprexit has finally happened,” Warren Ackerman, an analyst at Societe Generale, told Bloomberg.

The latest regional economic data slated for release include the eurozone consumer price index, due today; Germany's IFO business climate, due Tuesday; Germany's producer price index and eurozone current account, due Wednesday; eurozone consumer confidence, due Thursday; as well as Germany's GfK consumer confidence, due Friday.

ENDS

© Scoop Media