United States stock futures rebounded on Wednesday as House Republicans advanced Donald Trump’s tax cut plans, boosting investor confidence, according to Reuters.
The move follows the US House of Representatives’ narrow passage of a $4.5tn tax-cut plan late Tuesday, sending the budget resolution to the Senate, where Republicans are expected to take it up.
According to Reuters, investor sentiment also improved after reports that the U.S. and Ukraine had agreed on the terms of a draft minerals deal. As a result, Nasdaq futures rose by 0.7 per cent, while S&P 500 futures gained 0.5 per cent.
European markets followed the positive momentum, with the pan-continental STOXX 600 rising by one per cent to a new record. Blue-chip indexes in Frankfurt, Paris, and London also recorded gains between 0.7 per cent and 1.7 per cent.
Also, U.S. Treasury yields climbed slightly as investors anticipated more debt issuance ahead. The benchmark 10-year yield increased by one basis point to 4.306 per cent, following a nearly 10 basis point drop on Tuesday. The two-year yield, which is sensitive to Federal Reserve rate expectations, rose about two basis points to 4.119 per cent.
Traders are increasingly betting on more Fed rate cuts this year, driven by concerns over the U.S. economy. Data released on Tuesday showed a sharp deterioration in U.S. consumer confidence, marking the steepest decline in three and a half years. Fed funds futures now point to 55 basis points of easing priced in by year-end, implying at least two quarter-point cuts, up from about 40 basis points a week ago.
Meanwhile, U.S. copper prices surged by more than 3.5 per cent after Trump ordered a probe into potential new tariffs on metal imports. A massive power outage in copper-producing Chile also contributed to the price jump.
Reuters added that the dollar regained some ground after hitting its lowest level since December 10 earlier this week. The dollar index, which measures the currency against six other major currencies, rose by 0.3 per cent. Against the yen, the dollar climbed by 0.3 per cent to 149.47, driven by the rebound in U.S. Treasury yields. The euro eased by 0.3 per cent to $1.0484, while sterling stood at $1.2648, close to a two-month high.
Some of Europe’s most popular AI-linked stocks tumbled this week after analysts flagged concerns over a potential slowdown in Microsoft’s data centre leasing, dampening sentiment in the sector. An index of “Magnificent Seven” stocks fell by 2.5 per cent on Tuesday to its lowest level since November 27.