Stock markets sluggish as Trump tax cuts clear House
Stock markets were sluggish and US long-term borrowing costs surged Thursday as investors fretted over the US debt pile after President Donald Trump's sweeping spending and tax cut plan passed the House of Representatives.
Wall Street's three main indexes were mixed at the open before clambering barely into the green, with the broad-based S&P 500 and Dow adding around 0.1 percent while the tech-heavy Nasdaq rose 0.6 percent two hours into trading.
European key indexes ended their session just in the red as London, Frankfurt and Paris all shed around 0.5 percent as investors noted weak business activity data out of the eurozone and Britain.
The yield on 30-year US government bonds climbed to 5.15 percent following the House vote, nearing levels last seen in 2007 at the start of the global financial crisis.
"An absence of new trade ‘deals’ and continued worries about the US’ fiscal trajectory mean that optimism remains hard to find on Wall Street," commented Chris Beauchamp, chief market analyst at online trading platform IG.
"Stocks in Europe have fallen victim to further profit-taking this afternoon despite the passage of Trump’s tax bill in the House of Representatives," he added.
"Such progress on a deal might normally be seen as a positive, but the worsening US debt situation continues to drive higher yields in bonds and wariness among the investing community."
A weak auction of 20-year US government debt on Wednesday had already flashed a warning sign that the bond market was worried about America's finances.
Last week, Moody's lowered its top-tier credit rating for the world's biggest economy, citing the growing US debt mountain.
The dollar remained under pressure while bitcoin reached a new record, nearing $112,000, and oil prices fell.
"The growing mountain of US debt is causing ripples of worry across financial markets," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
"As the dollar has weakened, amid concerns about the US fiscal position, bitcoin has flexed even more muscle, as investors appear to be looking for alternatives to the greenback."
Traders in Asia were also worried about rising Japanese bond yields, analysts said.
Trump's "One Big, Beautiful Bill Act" passed by one vote -- 215 to 214 -- and along party lines after Republican leadership quelled a rebellion among fiscal conservatives.
Independent analysts warn the bill would increase the deficit by as much as $4 trillion over a decade.
The White House Council of Economic Advisors says the package will spur growth of up to 5.2 percent while Trump's spokeswoman insisted it would not add to the deficit.
- Key figures at around 1645 GMT -
New York - Dow: UP 0.1 percent at 41,902.28 points
New York - S&P 500: UP 0.1 percent at 5,851.93
New York - Nasdaq Composite: UP 0.6 percent at 18,983.25
London - FTSE 100: DOWN 0.5 percent at 8,739.26 (close)
Paris - CAC 40: DOWN 0.6 percent at 7,864.44 (close)
Frankfurt - DAX: DOWN 0.5 percent at 23,999.17 (close)
Tokyo - Nikkei 225: DOWN 0.8 percent at 36,985.87 (close)
Hong Kong - Hang Seng Index: DOWN 1.2 percent at 23,544.31 (close)
Shanghai - Composite: DOWN 0.2 percent at 3,380.19 (close)
Euro/dollar: DOWN at $1.1287 from $1.1334 on Wednesday
Pound/dollar: UP at $1.3427 from $1.3421
Dollar/yen: UP at 143.80 yen from 143.66 yen
Euro/pound: DOWN at 84.07 pence from 84.42 pence
West Texas Intermediate: DOWN 1.0 percent at $60.95 per barrel
Brent North Sea Crude: DOWN 1.1 percent at $64.20 per barrel
W.Wright--PI
