World stocks slip as tax jitters sap confidence

NEW YORK — Global stock markets retreated Friday, extending the previous session’s losses, as uncertainty over US President Donald Trump’s much-vaunted tax cuts and lackluster corporate earnings took their toll on investor confidence.

At the close of the trading day in New York, the Dow Jones Industrial Average snapped an eight-week winning streak, closing 0.2 percent lower, while the broad S&P 500 and tech-dominated Nasdaq were essentially flat.

Senate Republicans on Thursday released a tax plan that would put off promised steep corporate tax cuts for a year, and there was little in the way of US economic data to move markets in any direction as the quarterly earnings season winds down.

The Dow and Nasdaq have soared about 30 percent since Trump’s 2016 election victory on hopes of slashed taxes and regulation. But Phil Davis of PSW investments told AFP the prospect of delayed tax cuts had taken much of the wind out of Wall Street’s sails.

“A lot of the rally is priced on the full expectations of these companies to pay less taxes and earn more money,” he said. “If the tax cut is delayed until next year I would expect a five percent correction.”

In London the benchmark FTSE 100 index fell 0.7 percent on the day. 

A stronger pound tends to weigh on the share price of exporters, and “a fall in the (UK) trade deficit and improvement in manufacturing and industrial production has helped to lift the pound,” noted Chris Beauchamp, chief market analyst at IG trading group.

In the eurozone, Frankfurt’s DAX 30 lost 0.4 percent and the Paris CAC 40 shed 0.5 percent, extending sharp declines Thursday of up to 1.5 percent.

In commodities trading, oil prices were up amid growing tensions in the Middle East, after Saudi Arabia accused Iran of “direct military aggression” over a missile attack near Riyadh by Tehran-backed Yemeni rebels.