Asian shares pare gains as vote on US tax bill delayed

MSCI index of Asia-Pacific shares outside of Japan was flat

A currency trader works at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Dec. 1, 2017. Asian stock markets were marginally higher Friday, after an Show more

Asian shares and the dollar pared their modest gains on Friday, with risk appetites supported by advances on Wall Street but capped by concern as investors awaited the U.S. Senate’s vote on U.S. tax reform legislation.

MSCI’s broadest index of Asia-Pacific shares outside Japan nearly flat on the day, after brushing a two-week low. For the week, it was 2.6 per cent lower.

Japan's Nikkei stock index was up 0.1 per cent, on track to gain 0.9 per cent for the week.

“The market’s main focus is now whether the tax bill will pass or not,” said Yutaka Miura, a senior technical analyst at Mizuho Securities in Tokyo.

Late on Thursday, the Senate delayed voting on the bill as legislators wrestled with problems on an amendment sought by fiscal hawks to address a large expansion of the federal budget deficit projected to result from the measure.

The Senate adjourned, putting off any votes until Friday morning. It was still unclear whether a decisive vote on the bill would occur then.

On Wall Street overnight, major indexes marked gains, with sentiment lifted by apparent progress toward passage of the tax legislation. The S&P 500 SPX hit a record closing high and the Dow Jones industrial average topped the 24,000 mark for the first time.

EMini futures for the S&P 500 were down 0.3 per cent, edging lower after the Senate vote was delayed.

On Thursday, chances of passage of a Senate tax bill had been seen as rising, when influential Senator John McCain gave the bill his endorsement. The House had approved its own tax bill on Nov. 16.

News of McCain’s nod had pushed up U.S. Treasury yields to five-week highs, which underpinned the recently beleaguered dollar.

Yields also got a lift boost from U.S. data showing a rise in inflation and a decline in jobless claims, reinforcing expectations that the U.S. Federal Reserve will hike interest rates later this month, and several times in 2018.

But the greenback gave up some of those gains on Friday as yields edged lower after the tax vote’s postponement.

The 10-year Treasury yield stood at 2.409 per cent in early Asian trade, below its U.S. close on Thursday.

“We had good U.S. data overnight that added to rate increase expectations, but until there is an outcome on the tax reform vote, markets cannot move much,” said Harumi Taguchi, principal economist at IHS Markit in Tokyo.

The dollar index, which tracks the U.S. currency against a basket of six major rivals, edged 0.1 percent lower to 92.959, though it was still up 0.2 percent for the week.

The dollar was steady on the day 112.53 yen after touching 112.690 earlier, its highest since Nov. 21, moving away from a 10-week low of 110.85 yen hit on Monday.

The euro was slightly up on the day at $1.1912, though below its two-month peak of $1.1961 scaled on Monday.

Bitcoin was down 2.4 per cent at $9,707, holding above the previous session's low of $9,000, but well shy of this week's record high of $11,395. The cryptocurrency gained 55 per cent in November.

Crude oil futures built upon their gains made on Thursday after OPEC and non-OPEC producers led by Russia agreed to extend output cuts until the end of 2018, while also signalling a possible early exit from the deal if the market overheats.

U.S. crude futures were up 19 cents, or 0.3 percent, at $57.59 a barrel. For November, U.S. crude added 5.5 percent.

Brent crude futures added 29 cents or 0.5 per cent to $62.92 a barrel. Brent rose for a third consecutive month in November, gaining about 3.6 per cent.

Gold prices edged higher after marking a 3-1/2 week low in the previous session. Spot gold was up 0.1 per cent at $1,275.02 an ounce.