US stock market hits record high after Trump tax bill success - as it happened
All the day's economic and financial news, as news that the US Senate has passed a crucial tax reform bill lifts shares and the US dollar
- Latest: Dow hits record close despite late selloff
- Dow and S&P hit new highs
- Senate approved sweeping tax changes over the weekend
- Plan cuts US corporation tax rate from 35% to 20%
- Trump claims people will be "very, very happy"
- Critics says it's a giveaway for the rich
Earlier:
9.25pm GMT
So, not the most convincing rally we've ever seen.
And who can blame traders? There's plenty of reasons to be cautious, frankly - the stalling Brexit talks, the Michael Flynn situation, and the ongoing North Korean tensions for starters.
9.10pm GMT
NEWSFLASH! America's Dow Jones industrial average has closed at a new record high, thanks to optimism over Donald Trump's tax reforms.
But....the rally did threaten to fizzle out. In the end, the Dow only gained around 58 points to 24,290 - a gain of 0.25%.
8.47pm GMT
Now this wasn't in the script. With 15 minutes to go, the rally is running out of puff.
The S&P 500 is now pretty-much flat, and the Dow is shedding some of its gains too - now up just 0.3%.
Here's a nice little $SPX chart pic.twitter.com/v2xJUMxQmi
$SPX is red. This is not permitted.
8.25pm GMT
Technology stocks are still refusing to join the rally.
The tech-focused Nasdaq index is down almost 1% today, partly due to big names like PayPal (down 5.8%), Adobe (down 5.6%) and NVIDIA (down 5.1%).
7.27pm GMT
With around 90 minutes trading to go, the Dow Jones industrial average is toying with a new closing high.
7.21pm GMT
Our financial editor, Nils Pratley, isn't terribly impressed by today's stock market rally.
It's all so terribly short term, he writes...
Once the sugar rush fades, expect investors question the long-term economic benefits of cutting corporate taxes. If investors truly believed that the US economy was now set on a course towards higher growth, you would expect a reaction in the market for US government debt. Investors might start to predict higher inflation, for example.
But that is not happening. Instead, short-dated and long-dated US Treasury stocks are trading at very similar yields, which traditionally signals economic trouble ahead. Funnily enough, Trump never tweets about that.
Related: Rio Tinto changes its designated driver
6.33pm GMT
The US stock market rally could head even higher, if the two houses of Congress can agree a final tax bill.
Mike Bell of JP Morgan believes the tax trade has more legs, adding (via the FT):
We estimate that the market is only pricing in about a 50% probability of tax cuts and that if a tax plan is finalised this would push US equities higher.
6.00pm GMT
The Dow Jones continues to enjoy a good day, up around 200 points at 24,430.
Financial stocks are still leading the charge, up 1.7%.
5.43pm GMT
5.28pm GMT
European stock markets have closed higher tonight, led by Germany:
European markets finished broadly higher today with shares in Germany leading the region. The DAX was up 1.53% while France's CAC 40 gained 1.36% and London's FTSE 100 rose 0.53%. pic.twitter.com/VHgHGsQ8R0
4.09pm GMT
The eurozone's finance ministers have elected a new leader - Portugal's Mario Centeno.
#eurogroup has elected Portuguese minister Mario Centeno as successor @J_Dijsselbloem #congrats #goodluck pic.twitter.com/CFnUyCVPIb
3.59pm GMT
It's official - no Brexit breakthrough today.
3.40pm GMT
The pound is now dropping back, after DUP leader (and Theresa May ally) Arlene Foster warned that her party wouldn't accept any regulatory divergence between Northern Ireland and the rest of the UK.
That could be a spanner in the works for May's Brexit breakthrough.....
We will not accept any form of regulatory divergence which separates Northern Ireland economically or politically from the rest of the United Kingdom. pic.twitter.com/uCBVdfVQTJ
pound sliding back as fx markets nervous of deal being done now pic.twitter.com/8kJ7LThreF
3.31pm GMT
Wall Street investors are hoping that a final tax deal can be done soon (ironing out differences between the Senate and the House of Representatives).
Randy Frederick, vice president of trading and derivatives for Charles Schwab, explains (via Marketwatch):
"Getting the tax plan done will still be a challenge, but it doesn't seem as impossible as it once did, and now there's optimism that it could happen before the end of the year, which means it could be made retroactive and change the liability for companies and individuals for this year as well as next, which would be a positive.
3.24pm GMT
Here's a sobering thought. Former Treasury secretary Larry Summers has predicted that thousands of Americans will die early, if the tax changes approved by the Senate go through.
CNBC has the details:
About 10,000 Americans will die every year from lack of health coverage if the tax reform bill goes through as proposed, Larry Summers, the former Treasury secretary and White House economic advisor under Barack Obama, said Monday.
Citing studies on what happens to people who go from being insured to uninsured, Summers said the estimate is likely conservative.
Economist Larry Summers predicts 10,000 will die per year due to tax reform https://t.co/OZ2rZGIH5A
3.20pm GMT
Reports are coming through that the Eurogroup has approved the policy package agreed over the weekend by Athens and its creditors.
The county's leading daily, Kathimerini, says Euro group chairman, Jeroen Dijsselbloem, welcomed the deal ahead of the meeting telling the assembled media "it was exceptional" it had been agreed in time.
3.18pm GMT
Stocks are racing higher in New York, as traders cheer the US Senate's tax vote.
The Dow Jones has now gained an impressive 300 points, or 1.2%, to 24,532. That shows that Wall Street is applauding the prospect of corporation tax being cut from 35% to around 20%.
3.05pm GMT
Before we get carried away, let's remember that barely half of all Americans own stocks (either individual shares or through retirement accounts).
Inevitably, they will be the wealthier members of society -- who are also in the front line to benefit from Trump's tax changes (as this charts showed).
2.38pm GMT
Boom! The Dow Jones industrial average has hit a fresh record high in early trading.
The Dow jumped by 244 points to 24,475, a gain of around 1%, as New York traders applaud the prospect of tax reform legislation hitting the statute book.
Tax reform is popular with US businesses. The proposed law could reduce corporate tax rates to 20% (compared to 35% currently) and cut individual taxes too.
2.33pm GMT
Today, the honour of ringing the Wall Street opening bell goes to Groupon, the deals website....
2.28pm GMT
There's quite a festive mood on Wall Street today, partly thanks to the impressive Christmas tree outside the New York Stock Exchange.
2.01pm GMT
Futures pointing to a big day for stocks as the Dow soars more than 200 points pic.twitter.com/VcoO1mMXbw
2.00pm GMT
New York traders should prepare for a lively opening, when trading begins on Wall Street in 30 minutes.
A fresh record high looks nailed on, following the Senate's tax approval vote. Connor Campbell of SpreadEx explain:
The Dow Jones is set to strap a rocket to its back after the bell, with the futures pointing to a 220 point surge. That'd leave the Dow at - what else - a fresh all time high of around 24450, already making last Friday's FBI-revelations inspired panic a distant memory.
1.54pm GMT
The pound has now hit a six-month high against a basket of currencies.
Sterling's trade-weighted index at highest since May, up almost 6% since Aug lows and still rising on 'Brexit breakthrough' hopes https://t.co/kOHWyNxckr @jemimajoanna pic.twitter.com/gFaaStvWCT
1.15pm GMT
Elsewhere in Brussels, eurozone finance ministers are gathering for a eurogroup meeting.
They'll be electing their next president, to succeed Jeroen Dijsselbloem. Officially it's a close contest, with four candidates throwing their caps into the ring:
Candidates to head the Eurogroup pic.twitter.com/ZCoYB2gX0T
So much for the (secret) democratic process. Jeroen Dijsselbloem gives the game away by accidentally speaking of Centeno as his successor https://t.co/9iXMDIKS2K
With a compliance review completed in record time over the weekend, the Greek finance minister Euclid Tskakalotos will present the deal (referred to as staff level agreement) to euro area finance ministers today.
The policy package, a key part of the country's third bailout programme review, must be approved by the euro group before another tranche of aid worth a5bn can be released to Greece. If rubber-stamped today - less than two months after talks began - the disbursement could be made in January. "Although a lot of the measures are sensitive the real news is that the agreement was concluded in record time," said one insider. "It is recognised that we are committed to exiting the [bailout] programme."
12.50pm GMT
Here's a neat chart, showing how morale in Britain's construction and manufacturing sectors picked up in November.
While the Brexit divorce negotiations have entered a critical phase, British construction PMI extends a strong rebound pic.twitter.com/Vm0nlWWnwp
12.25pm GMT
The pound has now hit a one-month high against the euro, at a1.1415, thanks to those reports of a deal over the Irish border.
Hamish Muress, currency analyst at OFX, says investors are hoping for a significant Brexit breakthrough:
"It is understood that Prime Minister Theresa May has conceded ground to the EU around the Irish border and the final divorce bill for leaving the EU, which have been sticking points for both sides for months.
Despite the fine details of a draft agreement unlikely to be resolved until next week, the pound will be buoyed by the news that, for the time being, it looks like the EU will vote in favour of progressing talks to the next phase."
In the time you've been tweeting, "no regulatory divergence" has changed to "regulatory alignment" https://t.co/C8zLe14GqZ
Final wording of the text will be absolutely critical - whether it is 'no regulatory divergence' or 'continued regulatory alignment' - sounds tedious but hugely important - will NI continue with exactly the same rule + regs, or is it more of a fudge? Critical to DUP reponse
Question is what happens in NI in future when rest of UK wants to change law but they need to stick closer to the EU? This all has huge implications for devolution
12.25pm GMT
The Guardian's Business Today email has expanded its property coverage.
Related: Business Today: sign up for a morning shot of financial news
12.08pm GMT
The president is up, and predicting a Wall Street rally today:
With the great vote on Cutting Taxes, this could be a big day for the Stock Market - and YOU!
11.53am GMT
Sterling is pushing higher against the euro and the US dollar, following reports that Britain and the EU are close to a breakthrough.
After a slow start, the pound is now up half a cent against the dollar at $1.352.
MEP who has seen agreement tells us draft text of today's deal includes concession from UK on Irish border - in 'paragraph 48' - 'the pie is almost ready' he says
UK to 'concede' on single market and customs union https://t.co/wmKp2dHFbf via @rte
Related: Britain concedes on Irish border, senior MEP says after Barnier meeting - Politics live
11.27am GMT
The loudest complaint against Trump's tax 'reforms' is that the richest Americans will benefit the most.
And yesterday, the bi-partisan Congressional Budget Office showed very clearly that this is true:
Can't support this. pic.twitter.com/juNl5R4vVR
11.03am GMT
Economics professor Nouriel Roubini is concerned that the US budget deficit could spiral to $1 trillion by the end of the decade, thanks to Donald Trump's tax shake-up.
He fears it will precede a squeeze on government spending, potentially hurting welfare spending.
The US budget deficit will likely be above the symbolic level of $1 trillion by 2019 as it is about $660 in 2017, tax cuts will increase the deficit by $230b by 2019 while spending (on military, hurricanes, non defence, infrastructures) is likely to rise by over $100b by 2019
What will be the political consequences of the US budget deficit rising above the symbolic figure of $1 trillion by 2019 thanks to reckless tax cuts? The Reps will use it as an excuse to 'starve the beast' & slash entitlements even if their tax cuts starved the gov of revenues
Exactly. Spending cuts next. Couldn't be clearer. https://t.co/pkyPDAYG6q
10.54am GMT
A bit of work still needs to be done before Donald Trump can sign off a tax reform bill.
That's because the Senate and the House of Representatives (America's upper and lower chambers) have both passed different legislation. The two versions now need to be merged, starting today - creating an opportunity for lawmakers to raise objections.
It is by no means a done deal given that the Senate bill is different to the one passed by Congress in November which means any final version is likely to be revised, and then passed by both houses, before being sent for signature by the President.
What is unlikely to change are the headline numbers, which means that we can expect to see the corporation tax rate number reduced substantially from its current 35% to as low as 20%.
10.45am GMT
After a stellar year, world stock markets are closing in on a new record -- $100 trillion!
We're within a whisker of a combined $100 trillion market cap for global stocks. Admittedly a $1 trillion whisker, but still. pic.twitter.com/N785E8oBx1
10.27am GMT
Over in New York, Wall Street traders will be waking up to predictions of another record-breaking open in four hours time.
The gains came as investors shifted their focus away from political tensions in Washington and cheered weekend news that Senate Republicans passed a sweeping overhaul of the U.S. tax code.....
Hopes that the Trump administration and Republicans would usher in a business-friendly tax overhaul have been a driver for the stock market's record-setting streak over the past year. The House and Senate now must agree on a single tax bill before it can be sent to Trump to sign.
10.04am GMT
Blane Perrotton, managing director of the national surveyors Naismiths, says UK housebuilders are feeling more upbeat.
"After the Autumn Budget, developers feel like they have the Government behind them and that is further boosting confidence and activity levels.
"Residential development is certainly the most active it has been since before the Global Financial Crisis.
9.54am GMT
This jump in the UK's construction PMI is a little surprising, says Max Jones of Lloyds Bank Commercial Banking.
Jones reckons confidence among builders is quite 'brittle, adding:
"Anecdotal feedback indicates that margins are coming under pressure with competition increasing amid the ongoing economic uncertainty. Larger firms also feel caught in the middle between clients pushing for fixed-price contracts and investors hungry for fatter margins.
Construction bosses are also worried that the might struggle to find enough skilled labour after Brexit, Jones adds - although others are keen to invest in their UK workforce.
9.36am GMT
Breaking: Britain's construction sector grew at its fastest rate in five months in November.
Markit's latest PMI survey shows that housebuilding picked up last month, bringing some relief to Britain's builders after an autumn slowdown.
Good news! Markit " UK Construction output rises at fastest pace for five months, led by housing " #GDP #GBP
"UK construction companies experienced a solid yet uneven improvement in business conditions during November. Once again, resilient house building growth helped to offset lower volumes of commercial work and civil engineering activity.
"Survey respondents noted that residential projects underpinned the rebound in total new order growth to its strongest since June, helped by strong demand fundamentals and a supportive policy backdrop.
9.27am GMT
Trump's push to cut America's corporation from 35% to 20% could encourage US companies to repatriate some of their immense overseas cash piles.
Fortune Magazine says this is a victory for tech giants, who have lobbied hard on this issue:
Tech companies like Apple and Microsoft have for a long time balked at the 35% corporate tax the current tax code requires them to pay on worldwide profits returned to the U.S. To avoid paying, the companies have parked as much of their profit as possible in overseas subsidiaries in countries like Bermuda and Ireland, where tax rates are low.
The Big 5 tech companies-Apple, Alphabet, Amazon, Facebook, and Microsoft-currently have a combined $457 billion held in overseas subsidiaries. Apple holds more profits overseas than any other company, with Microsoft not far behind.
9.07am GMT
Europe's stock markets are recovering from Friday's shock news that former Trump advisor Michael Flynn had pled guilty to lying to the FBI.
Rebecca O'Keeffe, head of investment at interactive investor, explains:
"European markets are playing catch up after closing at the depths of the Friday market meltdown on Michael Flynn concerns and embracing the weekend's senate tax bill success.
The pro-business tax cuts look set to boost US economic growth and have provided further impetus for US and global valuations.
9.00am GMT
Every sector of the FTSE 100 is up this morning.
8.34am GMT
All the major European stock markets are up this morning, after the US Senate approved the tax reform package over the weekend.
The German DAX is leading the charge, up over 1%, with Britain's FTSE 100 and the French CAC close behind.
The U.S. Senate's approval to pass the tax cut bill on Saturday overshadowed the continuing investigation into connections between U.S. President's inner circle and Russia.
#Germany's Dax regains 13k in the wake of the weekend US Senate tax reform vote. Goldman sees US tax cut boosting growth 0.3ppts in 2018-19. pic.twitter.com/HxtanF2YFw
8.22am GMT
The US dollar has jumped by 0.5% against a basket of currencies this morning, reports Reuters.
8.07am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Related: Senate Republicans pass sweeping overhaul of US tax code
"In the waning hours, this bill is tilting further towards businesses and away from families.
"Every time the choice is between corporations and families, the Republicans choose corporations."
Theresa May and the Irish government have failed to reach a deal on the crucial Brexit issue of the Northern Ireland border ahead of a crunch meeting on Monday lunchtime with the European commission president, Jean-Claude Juncker.
Despite intense efforts over the weekend to agree a proposal on how to avoid a hard border in Ireland, Irish officials revealed at midnight on Sunday that "there is still a way to go" to achieve a meeting of minds on the issue.
Related: Theresa May fails to strike Brexit border deal with Irish government
Morning all!
- Asia mixed after failing to benefit from upbeat sentiment in US futures after Senate passed the tax bill
- Reports stated that UK and EU are on the brink of a Brexit divorce deal
- Highlights: US factory orders and UK PM May meets with Juncker and Barnier