Bonds Tumble, Equities Mixed as Tax Bill Passes: Markets Wrap

(Bloomberg) -- U.S. stocks fluctuated while Treasury yields climbed to a nine-month peak as the Republican tax overhaul passed its final vote before going to President Donald Trump for his signature.

The S&P 500 Index was little changed Wednesday, held back in part by slumping consumer and real estate shares, while the energy and telecom sectors rose. Core European bond yields followed Treasury rates higher, with European Central Bank asset purchases for the year ending Thursday.

The U.S. Senate approved the tax-cut legislation in a party-line vote and the House of Representatives passed the bill after a re-vote, bringing Trump to the brink of his first major legislative victory. The bill itself will be signed at a later date.

“The tax reform passing, you'd expect the market to celebrate that,” Kevin Caron, a senior portfolio manager at Washington Crossing Advisors, said by phone. “But in reality a lot of this has already been part of the drama over the last year or so in anticipation of this moment. The market has gotten what it has already been discounting in.” 

Tech shares led the Stoxx Europe 600 Index to its biggest decline in almost three weeks, with Spanish equities underperforming before Thursday's Catalan poll. Miners gained as the Bloomberg Commodity Index advanced for a sixth day. The euro climbed against the dollar, as did the British pound. The yen had its biggest decline against the greenback in almost two weeks.

Meanwhile, oil traded above $58 after a report of a drop in U.S. crude stockpiles. Gold edged higher and industrial metals rose.

Earlier, Japan's Topix index closed at its highest level since November 1991, while stocks in Hong Kong and China declined.

Terminal users can read more in our live markets blog.

Among the key events investors will be watching this week:

• The U.S. and U.K. publish updated estimates of third-quarter GDP.
• The Bank of Japan meets on Thursday to set monetary policy.
• Catalonia votes in an election Thursday that will pose a test for the Spanish region's secession movement.

And these are the main moves in markets:

Stocks

• The S&P 500 Index fell less than 0.05 percent as of 4 p.m. New York time
• The Stoxx Europe 600 Index fell 0.7 percent, its biggest drop in almost three weeks. 
• The U.K.'s FTSE 100 Index fell 0.3 percent. 
• Germany's DAX Index decreased 1.1 percent. 

Currencies

• The Bloomberg Dollar Spot Index declined 0.1 percent. 
• The euro advanced 0.3 percent to $1.1878, the strongest in more than two weeks. 
• The British pound rose less than 0.05 percent to $1.3386. 
• The Japanese yen fell 0.4 percent to 113.40 per dollar.

Bonds

• The yield on 10-year Treasuries gained three basis points to 2.50 percent, its fifth straight advance. 
• Germany's 10-year yield advanced three basis points to 0.41 percent, the highest in more than five weeks. 
• Britain's 10-year yield climbed four basis points to 1.25 percent.

Commodities

• West Texas Intermediate crude rose 0.9 percent to $58.07 a barrel, the highest in almost three weeks. 
• Gold gained 0.3 percent to $1,265.57 an ounce, the highest in more than two weeks. 
• Copper increased 1.5 percent to $7,044 a metric ton. 
• The Bloomberg Commodity Index rose 0.6 percent to its highest in more than two weeks.

--With assistance from Christopher Anstey and Robert Brand

To contact the reporter on this story: Kailey Leinz in New York at kleinz1@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn

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