The American stock market hit fresh highs Monday night as traders cheered Donald Trump’s major tax shake-up.
Wall Street’s S&P 500, Nasdaq and Dow Jones indices broke records amid rising optimism that the Republican party will be able to push its reforms through.
The rally was mirrored by markets around the world, with the UK’s blue chip FTSE 100 up 0.6 per cent or 46.44 points at 7,537.01.
The US plan will cut corporation tax from 35 per cent to 21 per cent in a bid to boost the economy. Trump is pictured in Washington on Monday
There were gains in Frankfurt and Paris too, following rises in Tokyo and Hong Kong earlier in the trading day.
Championed by President Donald Trump, the US plan will cut corporation tax from 35 per cent to 21 per cent in a bid to boost the economy.
It will also encourage big international firms such as Apple and Google’s owner Alphabet to bring back profits stashed overseas by charging an ultra-low one-off rate.
Many businesses have built up large reserves offshore because they do not want to pay heavy taxes on money brought back into the country.
An analysis by Bank of America estimated that 24 of the largest US companies have $1trillion stashed overseas – money that could otherwise be put to work in the nation’s economy.
There will also be cuts to inheritance tax and to income tax paid by the richest Americans.
Washington observers believe it is increasingly likely that the proposals will be passed, leading to some of the biggest taxation changes since Ronald Regan was President in the 1980s.
But opponents claim the changes will only help the wealthy – and cause suffering for poorer families.
A report last month by the Congressional Budget Office found that the bill ‘gives substantial tax cuts and benefits to Americans earning more than $100,000 a year’ (around £75,000), and would drive up the nation’s deficit by $1.47trillion.
Despite these concerns, big business has largely welcomed the cutbacks.
Upbeat trades pushed the technology-focused Nasdaq Composite index up 0.8 per cent or 58.18 points to 6,994.76.
It briefly rose above 7,000 for the first time in history.
The Dow, meanwhile, climbed 0.6 per cent or 140.46 points to 24,792.20 – meaning it is up more than 5,000 this year, another record.
And the S&P climbed 0.5 per cent or 14.35 points to 2,690.16.
Wall Street experts expect more growth to come.
Robert Pavlik of New York firm Slatestone Wealth said: ‘The market is going to continue its rally based on the belief that we’re going to see the Congress pass tax reform.’