Global Stocks & Dollar Surge as House Advances Trump Tax Cuts
Global Markets Rally as US Tax Cut Plan Advances
Global stocks and the US dollar gained momentum on Wednesday after House Republicans took a step forward in advancing President Donald Trump’s tax cut plans. Meanwhile, US Treasury yields edged higher following a sharp drop in the previous session.
Late on Tuesday, the Republican-controlled US House of Representatives narrowly approved Trump’s $4.5 trillion tax-cut proposal, moving it to the Senate, where Republican lawmakers are expected to take it up next.
“This is largely a positive development for corporate America,” said Lars Skovgaard, senior investment strategist at Danske Bank. “Less regulation and tax cuts are on the horizon, and if they go through, markets will likely respond favorably.”
Positive Market Sentiment
Investor confidence also received a boost from reports that the US and Ukraine had reached terms on a draft minerals agreement.
US stock futures rebounded, with Nasdaq futures climbing 0.7% and S&P 500 futures rising 0.5% following a mixed performance on Wall Street. In Europe, stocks extended their gains for a second day, with the pan-European STOXX 600 index climbing 1% to hit a new record. Blue-chip indexes in Frankfurt, Paris, and London rose between 0.7% and 1.7%.
“The tax plan progressed slightly faster than expected, which is helping the market rally,” noted Tony Sycamore, a market analyst at IG.
Bond Yields and Economic Outlook
US Treasury yields inched up as investors braced for increased debt issuance. The benchmark 10-year yield ticked up 1 basis point to 4.306%, following a near 10-basis-point drop on Tuesday. The two-year yield, which reflects expectations for Federal Reserve rate moves, rose 2 basis points to 4.119%.
On Tuesday, data revealed that US consumer confidence had suffered its sharpest drop in over three years, signaling growing economic uncertainty under the Trump administration. Concerns over the economy have prompted traders to increase bets on Federal Reserve rate cuts, with market expectations now pricing in at least two quarter-point cuts by year-end, up from just one a week ago.
Commodities and Currency Movements
US copper prices jumped over 3.5% after Trump ordered an investigation into potential new tariffs on copper imports. A major power outage in Chile, a key copper-producing nation, also contributed to the price surge.
Meanwhile, the US dollar regained some ground after recently hitting its lowest level since December 10. The dollar index, which measures the greenback against a basket of six major currencies, rose 0.3%. Against the yen, it strengthened 0.3% to 149.47, benefiting from the uptick in US Treasury yields. The euro slipped 0.3% to $1.0484, though it remained near a one-month high, while the British pound hovered close to a two-month peak at $1.2648.
Oil prices continued their downward trend, with Brent crude futures slipping 0.4% to $72.75 per barrel, following a 2% decline in the previous session. US West Texas Intermediate (WTI) crude edged down 0.3% to $68.72 per barrel. Gold prices remained stable at $2,913 an ounce.
Nvidia Earnings in Focus
Investors are eagerly awaiting Nvidia’s quarterly earnings report, set to be released later on Wednesday. As a leader in artificial intelligence (AI) technology, Nvidia’s results could provide insight into the strength of AI demand and whether the sector’s high valuations are justified.
"Any weakness in Nvidia’s earnings report could significantly impact investor sentiment toward AI stocks as a whole,” said Jacob Falkencrone, Saxo’s global head of investment strategy. “This isn’t just about Nvidia—it’s about whether the AI revolution can sustain its rapid growth.”
AI-linked stocks in Europe have already taken a hit this week after an analyst note raised concerns about Microsoft potentially slowing its data center leasing, dampening sentiment across the sector. The "Magnificent Seven" index, which includes Nvidia, dropped 2.5% on Tuesday, hitting its lowest level since late November.