Banking stocks dropped and the dollar slipped on Wednesday as doubts over tax cuts and bond market moves hurt profitability and raised questions over the longevity of the current expansion in the United States.
European banking stocks were the worst performing sector as share indexes across the continent opened lower, following a poor session for U.S. banks.
The dollar edged lower against a basket of currencies hurt by a media report that suggested the implementation of a centerpiece corporate tax cut under discussion in U.S. tax reforms plans could be delayed.
Derek Halpenny, head of global markets research at Mitsubishi UFJ in London, said he was dubious over the progress of the tax cuts program being urged by U.S. President Donald Trump’s campaign.
“The initial phases of discussions within the House (of Representatives) have brought up a lot of divisions and problems . If the story is true that they’re considering a delay of one year to the corporate tax cut, those big differences will need to be sorted,” he said. Francois Savary, chief investment officer at Prime Partners, said the doubts over the tax issue reinforce the case for some consolidation in the market, which has been fully priced for good news.
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