Shares end lower as Trump tax plan disappoints
STOCKS snapped their rally as the lack of details about Washington’s tax reform program soured investor sentiment.
The broader all-shares index also dropped 0.72% or 33.60 points to end the session at 4,579.20.
“Philippine markets ended the last [trading] day of April in the red as US stocks ran out of puff in the shadow of the bell to close narrowly lower and consolidate a stunning two-day rally as a lack of detail in Washington’s proposed tax plan, predominantly on how it will be funded, tempered near-term optimism,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said.
US Treasury Secretary Steven Munchin and National Economic Director Gary Cohn revealed plans for what they called the biggest tax cut in US history. This includes reducing the top income tax rate to 35% from 39.6%, while the business rate will be cut to 15% from 35%.
During his campaign, US President Donald J. Trump had backed plans to reduce taxes.
US stocks ticked lower on Wednesday following two sessions of strong gains as strong corporate earnings were offset by uncertainty over the feasibility of a proposed business tax cut.
The tax cut proposal from the Trump administration, however, offered no specifics on how it would be paid for without increasing the deficit.
The Dow Jones Industrial Average fell 21.03 points or 0.10% to 20,975.09; the S&P 500 lost 1.16 points or 0.05% to 2,387.45; and the Nasdaq Composite dropped 0.27 point to 6,025.23.
Most Southeast Asian stock markets also fell on Thursday, tracking Asian peers as a long-awaited US tax cut plan failed to inspire investors, though sentiment remained supported by global growth prospects and receding worries about political risks in Europe.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.2% after hitting its highest since June 2015 on Wednesday.
Back home, all sectoral counters closed in negative territory, led by services which declined by 1.24% or 20.41 points to 1,615.30. Industrials fell 1% or 114.28 points to 11,307.59; property dropped 0.91% or 30.65 points to 3,326.25; holding firms went down 0.67% or 53.04 points to 7,814; financials lost 0.47% or 8.98 points to 1,887.10; and mining and oil slipped by 0.20% or 24.83 points to 12,070.72.
Value turnover stood at P5.76 billion as 1.62 billion shares changed hands, down from the previous day’s P6.46 billion.
Decliners beat advancers, 122 to 72, while 52 stocks closed unchanged. Foreigners turned sellers, with net outflows recorded at P145.97 million, a reversal of Wednesday’s net purchases worth P616.71 million.
Trading is suspended on April 28 to give way to the Association of Southeast Asian Nations Summit hosted by the Philippines. Markets will also be closed on May 1 in observance of Labor Day. -- A.B. Francia with Reuters