Stocks mixed as US tax reform outcome awaited

Stocks fluctuated at the start of the last month of 2017 and S&P 500 Index futures declined as the US tax bill encountered stumbling blocks. The dollar headed for its first weekly gain in four weeks ahead of the tax vote.

Japanese shares trimmed an advance that briefly helped the Nikkei 225 Stock Average reclaim a 25-year high reached in November. Shares rose in Australia and swung between gains and losses in Hong Kong. Treasuries held a slide, with the 10-year yield breaking above 2.4%.

The dollar came under pressure after the US Senate suspended votes on the bill until Friday as it emerged a key compromise to help its passage collapsed.

The Dow Jones Industrial Average climbed past 24 000 after John McCain backed the Senate tax bill, and the S&P 500 Index capped its longest monthly winning streak since 2007 as technology stocks rebounded.

McCain’s backing of the bill prompted optimism on its prospects as it’s headed for a marathon debate on the Senate floor.

Senate Majority Leader Mitch McConnell said votes on the tax bill will resume at 11am on Friday as the collapse of a key compromise to win a majority for a Senate tax overhaul left Republicans scrambling to salvage the legislation.

Markets have become sensitive to any progress on US tax reform that would give yet another impetus to an equity bull run into the final weeks of the year that has been fuelled by optimism on earnings and economic growth throughout 2017.

 It’s also raised concerns about stretched valuations and the sustainability of the equity rally. The MSCI Asia Pacific Index is poised for its biggest weekly decline this year.

Japan’s inflation sped up in October, though price rises are still less than half the central bank’s 2% target. In South Korea, inflation unexpectedly slowed to a one-year low and economic growth was slightly stronger than the central bank’s initial estimate.

China’s Caixin manufacturing PMI slid to 50.8 in November from 51.

Meanwhile, Washington politics has again been thrust into the spotlight amid a report that the White House is weighing replacing Secretary of State Rex Tillerson as his relationship with President Donald Trump sours.

Oil posted its longest streak of monthly gains since early 2016 after an Opec-led coalition of major crude producers followed through on a long-awaited extension of supply cuts.

Here are some key events for the remainder of this week:

Manufacturing in the US probably remained robust in November. The Institute for Supply Management’s index, out on Friday, is settling back to a more sustainable pace after climbing to a 13-year high two months earlier in the aftermath of Hurricane Harvey.

St. Louis Fed President James Bullard and Dallas Fed President Robert Kaplan are scheduled to speak. Markets in Indonesia, Malaysia, Pakistan and Sri Lanka are closed for holidays.

These are the main moves in markets:

Stocks

Euro Stoxx 50 futures fell 0.1% in early European trading. Futures on the S&P 500 Index also lost 0.1%. The underlying gauge rose 0.8% to a record at the close in New York. The Topix index rose 0.3% at the close in Tokyo to advance for a second week.

The Nikkei 225 Stock Average rose 0.4% after earlier jumping as much as 1.2% to touch the highest since 1992. Australia’s S&P/ASX 200 Index gained 0.3%. The Kospi index was down less than 0.1%.

Hong Kong’s Hang Seng Index fluctuated. The Shanghai Composite Index was little changed. The MSCI Asia Pacific Index was down 0.1%.  

Currencies

The Bloomberg Dollar Spot Index fell 0.1%. The yen was trading flat at 112.59 per dollar. The euro traded at $1.1915, up 0.1%. The British pound was at $1.3526, near the strongest in more than two months.

Bonds

The yield on 10-year Treasuries was steady at 2.40%. German 10-year bund yields were little changed at 0.37%.

Commodities

West Texas Intermediate added 0.5% to $57.68 a barrel. Gold was at $1 2 75.55 an ounce.