logo
US stocks hit new highs on trade and tax optimism

US stocks hit new highs on trade and tax optimism

RTHK3 days ago
US stocks hit new highs on trade and tax optimism
A trader works on the floor of the New York Stock Exchange. Photo: AFP
Wall Street stocks rose again on Monday amid optimism over trade negotiations and US tax cut legislation to conclude the final session of the second quarter at fresh records.
The S&P 500 finished at 6,204.95, up 0.5 percent for the day and about 10.6 percent for the quarter.
The tech-rich Nasdaq Composite Index climbed 0.5 percent to 20,369.73, which was also record, while the Dow Jones Industrial Average gained 0.6 percent to 44,094.77.
"Investors are feeling optimistic that we had a very strong quarter with reasons to feel optimistic," said CFRA Research's Sam Stovall, who cited easing trade tensions and fewer worries about inflation as drivers.
The latest records came after Canada rescinded taxes impacting US tech firms, setting the stage for negotiations to resume between Washington and Ottawa after President Donald Trump abruptly broke off talks on Friday because of the tax.
Trump administration officials have said they are making progress on trade deals with major partners and could unveil trade agreements in the coming months.
An aggressive tariff plan announced by Trump in early April initially battered financial markets, but Trump has backed off many of the most onerous provisions.
Analysts have also cited investor enthusiasm about Trump's massive tax cut legislation currently being debated in the Senate. The measure also contains controversial cuts to health benefits for low-income populations and heavy spending on deportation programs.
Large banks including Citigroup and JPMorgan Chase advanced after the Federal Reserve on Friday gave the industry a passing grade on stress tests, a finding that could boost givebacks to investors through shareholder repurchases and dividend hikes.
Shares of Facebook parent Meta rose 0.6 percent and touched an all-time record as the company extends an aggressive recruitment drive of top artificial intelligence talent, luring some experts from other companies with US$100 million bonuses.
Moderna rose 1.6 percent after announcing positive results from a phase three clinical trial into a vaccine for seasonal influenza. (AFP)
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

‘A hot Trump summer': US president delivers scorching wins at home and abroad
‘A hot Trump summer': US president delivers scorching wins at home and abroad

South China Morning Post

time3 hours ago

  • South China Morning Post

‘A hot Trump summer': US president delivers scorching wins at home and abroad

Even for a man who once boasted that his supporters would get 'tired of winning', US President Donald Trump is on a roll. The 79-year-old's victory on his 'one big, beautiful' bill is the latest in a series of consequential successes at home and abroad in the past two weeks. From US air strikes that led to an Iran-Israel ceasefire to a Nato spending deal and a massive Supreme Court win, they have underscored Trump's growing power. The Republican will now take a victory lap wrapped up in the US flag after Congress passed the tax and spending bill that embodies the political goals of his second term. He will sign it at an Independence Day event at the White House on Friday featuring a flyover by a B-2 stealth bomber, the type of aircraft used in the US raids on Iranian nuclear sites. 'It's going to be a HOT TRUMP SUMMER,' the White House said on social media.

HK stocks open down despite Wall Street surge
HK stocks open down despite Wall Street surge

RTHK

time4 hours ago

  • RTHK

HK stocks open down despite Wall Street surge

HK stocks open down despite Wall Street surge The Hang Seng Index lost 169 points, or 0.7 percent, to open at 23,900. File photo: RTHK Asian stocks were mixed in early trades despite Wall Street indices finishing at fresh records overnight following solid American jobs data as US President Donald Trump's sweeping budget bill successfully reached the congressional finish line. In Hong Kong, the benchmark Hang Seng Index lost 169 points, or 0.7 percent, to open at 23,900. Across the border, mainland Chinese stocks opened lower, with the benchmark Shanghai Composite Index down 0.05 percent to open at 3,459 while the Shenzhen Component Index opened flat at 10,534. The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, was up 0.2 percent to open at 2,168. Further afield, Australian shares moved closer to a record high, boosted by technology and financial stocks ahead of an expected interest rate cut by the local central bank next week, though losses in commodity stocks capped gains. The S&P/ASX 200 index rose 0.2 percent to 8,611 points by midday local time, just 27 points shy of the record high hit on June 11. The benchmark has gained more than one percent so far this week and is headed for its best week since mid-May. (Xinhua/Reuters/AFP)

Is US dollar flirting with a ‘Liz Truss moment' amid tariff chaos?
Is US dollar flirting with a ‘Liz Truss moment' amid tariff chaos?

AllAfrica

time4 hours ago

  • AllAfrica

Is US dollar flirting with a ‘Liz Truss moment' amid tariff chaos?

Though the US dollar has been on a downward path all year, there's something particularly ominous about the most recent declines. The losses are coming even as US government bond yields are rising. Normally, an increase in interest-rate differentials is dollar positive. Yet the dollar's 13.5% drop this year appears to be accelerating in ways that economist Robin Brooks thinks deserve more attention. One reason: The interplay between US rates and the dollar echoes what the UK experienced in late 2022 in what was essentially a debt crisis. 'Signs are mounting that a similar risk premium may be starting to build for the US dollar,' says economist Brooks at the Brookings Institution. It suggests that 'many years of very loose fiscal policy may be coming to a head amid tariff uncertainty.' This dynamic calls to mind Warren Buffett's famous observation that 'only when the tide goes out do you discover who's been swimming naked.' There's no better example of a developed nation trying to get away with skinny dipping than the US, as its public debt tops US$37 trillion. Only time will tell if US President Donald Trump and the Republicans are courting a 'Liz Truss moment' as their 'Big, Beautiful Bill' adds an estimated US$4 trillion to the federal deficit. That increase, equivalent to the size of Japan's annual GDP, could indeed pique the interest of credit rating analysts at S&P Global, Fitch and Moody's Investors Service. Until recently, Brooks argues, much of the commentary on the dollar was too alarmist. That's because a material part of the dollar decline since the start of Trump 2.0 in January was attributable to Germany's surprise fiscal stimulus announcement in early March, which caused the dollar to fall 4% on a trade-weighted basis. Factoring this in, the dollar was essentially unchanged from election day on Nov. 5. 'However,' Brooks says, 'a more worrying dynamic has taken over in recent weeks, with the dollar falling sharply against its G10 peers. What's especially worrying is that the latest fall comes amid rising US interest rates, which is something that has tended to support the dollar.' The US currency, he explains, 'has been falling even as the interest differential has risen. This combination — a falling currency even as rate differentials rise — is deeply worrying. It harkens back to 2022, when the UK experienced what was essentially a debt crisis, with rising yields and a falling pound.' That infamous episode followed then-UK Prime Minister Truss in September 2022 trying to sneak a sizable unfunded tax cut past the so-called 'bond vigilantes.' It did not go well. As the gilt market crashed, a UK tabloid began live-streaming a head of lettuce next to a framed Truss photo to see if it could outlast her premiership. The lettuce won. The idea that a similar unraveling might befall the US has been contemplated myriad times post-2008. That was one of the hinge points for the explosion of the US national debt that occurred since then. The fallout from the 'Lehman shock' has Washington ramping up fiscal stimulus aggressively. The resulting debt buildup led to S&P's earthquake-generating decision in 2011 to yank away Washington's AAA rating. Then came the Covid-19 crisis that turbocharged US borrowing programs. When S&P acted 14 years ago, the US debt was just US$14 trillion. In August 2023, when Fitch Ratings downgraded Washington to AA+, the national debt was US$31.4 trillion. As Fitch said at the time, the downgrade 'reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance' relative to peers. Most recently, in mid-May, Moody's pulled the trigger, revoking the pristine US rating it had maintained since 1919. As Moody's analysts put it, 'successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs.' Stanford University economist Darrell Duffie called it a wake-up call for Congress 'to discipline itself, either get more revenues or spend less.' Only when the tide goes out do you discover who's been swimming naked Warren Buffett The opposite happened this week as Congress added the equivalent of two Russian economies to the federal deficit. Spencer Hakimian, CEO of hedge fund Tolou Capital Management, tells Reuters that Moody's spotlighted the 'continuation of a long trend of fiscal irresponsibility that will eventually lead to higher borrowing costs for the public and private sector' in the US. Economist Philip Luck at the Center for Strategic and International Studies argues that this most recent downgrade was 'more than a technical market event — it represents an emerging consensus that the United States' mounting debt burden has shifted from an abstract risk to a strategic constraint on US power and leadership.' As borrowing costs rise and fiscal space narrows, Luck says, 'the nexus between debt and national security becomes increasingly salient. As interest payments surpass defense spending, global growth slows and demographic pressures accelerate, the United States faces difficult choices.' Luck says that without reform, debt is projected to reach 156% of GDP by 2055, threatening to erode US power in an era of intensifying great power competition and validating 18th-century economist Adam Ferguson's centuries-old warning that nations may mortgage their liberty through excessive borrowing. 'In the years ahead,' Luck notes, the US will face stark choices about spending, taxation, and the burdens of global leadership. Perhaps the most dangerous threat is not economic but psychological: the false belief that dollar dominance insulates the US from the consequences of fiscal recklessness.' As the federal debt climbs toward 160% of GDP and interest payments consume a growing share of the budget, Luck warns, critical investments in defense, diplomacy and domestic priorities are increasingly at risk. 'The US,' he concludes, 'may forfeit not just its credit rating, but its global leadership – exactly the kind of decline Ferguson warned of. The US still commands unparalleled economic and strategic strengths. But without serious fiscal reform, those strengths will wither. History teaches that great powers seldom fall to external forces alone; more often, they crumble under the weight of their own unsustainable choices.' One flashpoint might be Asia's vast holdings of US Treasury securities. As Trump and the Republicans blow out the US debt, officials in Tokyo are sitting on US$1.1 trillion of US debt that might now go awry. Beijing has about US$770 billion of Treasuries, while the Asia region is exposed to Washington's fiscal mess to the tune of more than US$2.5 trillion. China, of course, is no happier now than it was right after the 2008 global financial crisis. At the time, in 2009, then-Chinese Premier Wen Jiabao warned that 'we have made a huge amount of loans to the United States. Of course, we are concerned about the safety of our assets. To be honest, I am a little bit worried.' He urged Washington 'to honor its words, stay a credible nation and ensure the safety of Chinese assets.' At the time, the US debt was less than US$12 trillion, two-and-a-half times lower than when Fitch Ratings downgraded the US in 2023. Today, Moody's Investors Service is mulling whether to maintain Washington's last AAA rating with the US debt three times what it was in 2009. Hence, the concerns being expressed by economists like Brooks at Brookings. Particularly given parallels between what tripped up the UK in 2022 and the US today. 'This kind of counterintuitive price action is highly unusual for the dollar and may be a signal that – after many years of very loose fiscal policy – tariff uncertainty is now bringing things to a head' with the 'ultimate metric for global confidence in the United States.'

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store