By Joyce Yu
Philadelphia, PA–U.S. Stocks are weighted down by worries over potential delay in U.S. tax cut plans and increasing jobless claims. The Dow lost nearly 100 points at open Thursday.
Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 239,000 for the week ended Nov. 4, the Labor Department said on Thursday. Claims had fallen to 229,000 in the prior week, near a 44-1/2-year low, suggesting that claims processing disrupted by recent hurricanes has begun to improve. However the claims remained below the 300,000 threshold, signaling a tight labor market.
Investors were also concerned about the potential fallout from Democrat wins in regional U.S. elections this week, sparkling rising skepticism over a Republican tax overhaul plan. The S&P 500 has risen about 21 percent since a year ago, partly on the back of high expectations of tax cuts.
“With concerns rising over possible delays in the U.S tax reforms, equity bears could make an unwelcome appearance, consequently exposing global stocks to downside risks,” said Lukman Otunuga, research analyst at FXTM. “Investors should also keep in mind that geopolitical tensions and political risk in the background, have the ability spark risk aversion.”
Over in Asia, US President Trump and Chinese President Xi Jinping, on Thursday announced more than $250 billion in deals between the two countries across industries like energy, technology and aviation. However, a number of the deals signed were only framework agreements, meaning the details are still up for negotiations, according to several reports.
“I am somewhat skeptical of such a large number,” Alex Wolf, senior emerging markets economist at Aberdeen Standard Investments, told the Reuters Global Markets Forum, adding that the overall tone of the visit so far had been “positive”. “I suspect they might be primarily MOUs instead of actual contracts and the actual contract amount may be substantially less.”
Qualcomm which has been in focus for its M&A deal, signed non-binding agreements worth $12 billion with three Chinese handset makers Xiaomi, OPPO and Vivo, while Boeing announced a deal with state-run China Aviation Suppliers Holding Co to sell 300 Boeing jets, though analysts said it was unclear how many of these were new orders.
China Energy Investment Corp also announced a 20-year $83.7 billion investment in shale gas developments and chemical manufacturing projects in West Virginia. It marks the first major overseas investment for the newly founded China Energy, which formed from the merger of China Shenhua Group, the country’s largest coal producer and China Guodian Corp, one of China’s top five utilities.
