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European and US stocks slide

Nov 19 2017 10:12

New York - Wall Street stocks joined European equity markets in retreating on Friday, along with the dollar, as Washington braced for a bruising political battle in the US Senate over tax cuts.

The House of Representatives as expected on Thursday approved its version of the tax reform legislation, while a key Senate panel cleared a different version.

Treasury Secretary Steven Mnuchin predicted a final tax plan would reach President Donald Trump's desk by Christmas, but observers said that time-frame would be tough give the tight margins and growing concerns in the Senate over some measures.

The battle for tax reform moves to "the hard part," said Oxford Economics. "The hurdles get higher from here as the Senate will have a tougher time than the House did in passing legislation."

In Europe, London's FTSE 100 ended the day 0.1% lower, while in Paris the CAC 40 shed 0.3% and the DAX 30 in Frankfurt gave up 0.4%.

In the US, the Dow Jones Industrial Average and the broader S&P 500 each posted their second straight losing week.

European indices stumbled on stubborn fears over Britain's EU departure, with sentiment also dented by the strong euro and pound.

European Union leaders warned British Prime Minister Theresa May at a Gothenburg summit on Friday that the "clock is ticking" to make Brexit concessions - and it is increasingly likely discussions will fail to move on to the next phase as hoped in December.

In Berlin, tough talks to form Germany's next government went into overtime on Friday, putting Chancellor Angela Merkel's political future in the balance as failure to produce a deal could force snap elections.

"Markets are continuing to consolidate," City of London Markets trader Markus Huber told AFP.

"There are a few worries, like ongoing Brexit negotiations and the stalling of Germany's Merkel forming a coalition government, but overall global growth and corporate earnings remains firm."

The dollar, meanwhile, was under pressure. BK Asset Management's Kathy Lien said currency traders have built in assumptions that the Federal Reserve will lift interest rates next month, but uncertainty over tax cuts will weigh on the greenback.

"We say often that tax reform is the Trump Administration and the US economy's greatest opportunity for growth and while the House voted to pass its tax bill this past week, the Senate is where the real battle will take place," Lien said.

Oil prices finished solidly higher, rallying after a series of declines after Saudi Arabia's Energy minister Khaled al-Faleh said he remained committed to an OPEC deal to limit oil production.

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