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Generally strong company earnings kept the ASX chugging higher this week, though global disappointment at the unclear tax proposals from the US administration weighed on global market sentiment.
There was solid buying support for the big four banks, as investors factor in an increase in home loan interest rates, while wayward commodity prices have weighed on the big miners.
Over the week, the benchmark S&P/ASX 200 Index and the broader All Ordinaries Index rose 1.2 per cent, respectively. On Friday the ASX 200 reversed early losses to end the session broadly flight at 5924 points, while the All Ords nudged a touch higher to 5948 points.
The benchmark top 200 index pushed through 5900 points mid this week, following a wave of renewed optimism among global investors on talk of US fiscal policy and after last weekend's French election provided a market-friendly result.
"Although global events have buffeted our market around week to week, underlying all that market earnings are growing pretty strongly for fiscal 17," said Tony Brennan, head of equity market strategy at Citi.
"The continuation of these earnings will see the market over 6000 points I would think."
Technology stocks have enjoyed considerable shareholder interest this week, especially after Alphabet and Amazon in the United States beat expectations. Computershare closed 3.6 per cent higher on Friday after releasing an investor presentation on Friday outlining its plans to improve its margin income.
Gold miners were smashed as the safe haven trade diminished. Dominant geopolitical risks out of North Korea, Syrian and Europe has abated somewhat, which has seen bullion fall back to $US1265.2 an ounce.
Australia's largest producer Newcrest was off 10 per cent for the week, while Evolution was down 4.9 per cent and Regis Resources was down 0.6 per cent.
Iron ore managed to hold around $US66 a tonne for the week though narrowing margins for steel producers, rising iron ore supply and current high inventories are expected to push the iron ore price lower over the medium term.
As such, resources giant BHP BIlliton was off 1.3 per cent, as oil prices declined, while Rio Tinto managed to claw 0.3 per cent higher over the week.
In other equities news, ResMed shares slipped 3.9 per cent on Friday after disappointing investors with a lower-than expected third-quarter results. Revenue came in 2 per cent lower than the consensus forecast made my analysts, but earnings per share of US71¢ (up 3 per cent) was in line with estimates.
Here's a twist on the whole battle between index investing, or the passive approach, and getting an active manager to look after your money.
It's possible to have both.
While, active fund managers claim they can generate superior returns over time, it doesn't always pan out that way and yet investors still have to fork out those hefty fees for the privilege of having those managers look after their money.
On the flip side, the passive indexers are always quick to point to those higher fees and the historical studies that show indexing does well in the long term.
Little wonder there are so many disillusioned investors looking around for alternatives.
But according to BetaShares chief economist, David Bassanese, there's a way to beat the sharemarket, and get that extra performance, but still have all the benefits of a low cost index product.
It's passive index investing but with that extra return.
There's an ETF with the ASX code QOZ that tracks the top stocks but not in a way the major S&P/ASX 200 index does.
Normally active managers are benchmarked to an index like the top 200 and that index is made up of stocks that all have a different weighting.
Indeed, the top 20 stocks account for almost 60 per cent of the major index and it's one argument that active managers use to try and persuade investors to invest with them.
The theory goes that the major index has too much exposure to banks, or in the past resources, and so investors need active managers to counteract that heavy weighting.
But the BetaShares FTSE RAFI Australia 200 ETF (QOZ) is an index which weights stocks in a different way.
This index looks at stocks through the prism of earnings, book value, dividends and cash flows.
In other words, it's more weighted on fundamentals and has nothing to do with market cap.
"The benefit of this approach is that it effectively over weights (relative to a market-cap index) cheap stocks and under weights expensive stocks, and has therefore produced persistent outperformance, as these stock mis-valuations correct over time" says Bassanese.
Chinese steel futures are up for a fourth day, climbing to a three-week high, amid expectations of a pickup in demand next month after a shaky start to what is typically a brisk consumption period.
Steel's gains also lifted raw material iron ore futures, but are unlikely to sharply raise spot iron ore prices which are headed for their biggest monthly decline in nearly a year.
Shanghai rebar is on track to end April lower amid a slow start to a seasonally busy period for construction activity in China, but could improve in May.
"There are expectations that underlying demand will see some improvement after the May holiday so there should be some restocking demand," said CRU consultant Kevin Bai. Chinese markets are shut on May 1 for the Labor Day holiday.
The most active rebar on the Shanghai Futures Exchange was up 2.8 per cent at 3067 yuan ($US445) a tonne, after rising as far as 3085 yuan earlier in the session, its strongest since April 7. It has dropped 3.2 per cent for the month so far.
But the construction steel product has gained 5.2 per cent this week on unconfirmed market talk of possible production curbs in areas surrounding Beijing, including top steel-producing province Hebei, ahead of a mid-May summit in the capital.
A steel mill in Hebei has not received any government notice yet on production cuts, said an official at the mill who declined to be named because he is not authorised to speak to the media.
The recovery in steel futures has boosted sentiment in the physical market, lifting spot prices, said Bai.
Firmer steel prices lifted iron ore on the Dalian Commodity Exchange by 1.6 per cent to 506.50 yuan per tonne.
Iron ore for delivery to China's Qingdao port slipped 0.3 percent to $US66.42 a tonne on Thursday, according to Metal Bulletin.
Keeping on the ever-entertaining housing theme:
Limiting the use of negative gearing to $10,000 would affect 300,000 families and raise an extra $1.5 billion in revenue a year, modelling shows.
The Turnbull government has examined ways to adjust tax settings to make housing more affordable, especially for first-home buyers.
This includes placing a dollar limit on negative gearing or limiting the number of negatively geared properties an investor can hold.
While the government has not released any analysis, Ben Phillips from the Australian National University's Centre for Social Research and Methods modelled the imposition of caps at $10,000, $20,000 and $50,000.
These limits would cap the amount of net rental loss that can be claimed against income.
If negative gearing was abolished altogether, 1.15 million families would be affected but the federal budget would get a $4 billion boost, the modelling shows.
A $10,000 limit would increase revenue by $1.5 billion a year.
Lifting that to $20,000 would see revenue gain of $751 million. In this scenario 113,844 families would be affected.
A $50,000 limit would raise $172 million and affect 19,000 families.
Higher income earners would suffer most if caps were imposed because they are the ones that use negative gearing most.
For example, 30 per cent of families affected by a $10,000 cap would be in the top income decile – that is, singles earning more than $140,000 a year and families on more than $210,000 combined.
They would contribute 43.8 per cent of the extra revenue generated by a $10,000 cap, or $678 million, the modelling shows.
If a cap were imposed at $50,000 more than half of those affected would be in the top decile of income earners.
On Thursday, Labor Leader Bill Shorten described the existing tax breaks for investors as "rigged" against "ordinary Australians".
Labor's policy is to only allow negative gearing on new homes starting from July 1 this year. Mr Shorten would also reduce the capital gains tax discount.
Housing affordability was also on Treasurer Scott Morrison's mind. In a final pre-budget speech he warned that major changes to negative gearing would be "dangerous".
The number of foreign investment applications for residential housing is falling from from 40,000 last year to an expected 15,000 this year according to Treasury analysis, raising further questions about a cooling housing market.
As both sides of politics, most recently the state and federal Labor parties, have turned up the heat on foreign buyers with policies that will increase fees on their purchases, federal Treasurer Scott Morrison is suggesting that it will be a less lucrative area for revenue collection.
"We are already seeing signs the heat in our housing markets may be coming off, especially in the apartment market," Mr Morrison said.
"Cooling foreign investor interest, due to tougher foreign investment rules implemented by our Government and capital outflow restrictions in China, are already having an impact."
The property industry has already slammed the attack on foreigner buyers, saying new imposts on them are unjustified, claiming they are not a cause of surging house prices.
Labor leader Bill Shorten's pledge to double the fees and penalties imposed on foreign property buyers and tax vacant properties drew a strong reaction for singling out Chinese investors, which ranked as the biggest foreign buyer of property last year, said the Foreign Investment Review Board.
According to FIRB's last annual report, there were 36,841 residential real estate proposals approved in the 2014-15 financial year, compared with 23,054 the year before.
FIRB said "a large proportion of these approvals involved Chinese investors".
But due to restrictions on the outflow of capital in China and new imposts on foreign buyers, some analysts are already raising the question as to whether Chinese buyers will start to back out of the Australian real estate market.
Other countries such as Canada have also taken strong measures to contain the amount of foreign buyer purchases.
Canada's biggest city, Toronto, said it would copy Vancouver in imposing a 15 per cent surcharge on non-Canadian and non-permanent resident buyers of residential property.
The AFR's John McDuling points out that when it came to its quarterly results, Amazon didn't mention Australia once (unless you count Cate Blanchett):
Amazon's quarterly earnings release Friday morning may provide the tiniest glimmer of hope for Australian retailers.
It hinted, ever so slightly, that for all the excitement and fear about e-commerce titan's imminent arrival, its global expansion focus at the moment lies not on these shores, but elsewhere.
In the earnings release provided to investors this morning, there were 10 references to India (a gigantic market that is critical for the company, and where it is waging a fierce battle with local VC backed player Flipkart). The UK was mentioned four times, Japan and Germany warranted three mentions, Mexico got one, even Sweden, where it is building a distribution centre, received a shoutout.
Australia, the world's 12th biggest economy where Amazon finally confirmed plans to bring its full e-commerce service. Nothing. In fact the only thing remotely Australian in the release was a mention for Cate Blanchett, our Cate, who made a film that is using new Amazon's digital film distribution service.
German Chancellor Angela Merkel laid down a tough line for Brexit talks with the UK and warned that London was harbouring "illusions" about getting preferential treatment
Addressing the German parliament before the remaining 27 European Union leaders meet on Saturday to discuss Britain's exit, Mrs Merkel said the bloc will put its interests first and that talks on departure terms must precede the crafting of a new trade relationship. The EU is heading into the "very complex" negotiations with a strong sense of unity, she said.
"You might think that these things are self-evident, but unfortunately I have to put it in such clear terms because I have the feeling that some in Britain still have illusions about this," Mrs Merkel said in Berlin on Thursday, drawing applause from lower-house lawmakers. "But that would be a waste of time."
Theresa May pounced on Mrs Merkel's remarks as she campaigned for British elections in June, saying such talk shows why she needs "the strongest possible hand" to go into battle with European Union negotiators.
Mrs Merkel's warning echoes comments from German officials who have said negotiators in Prime Minister Theresa May's government were underestimating the complexity of the talks and the economic reality of a UK outside the EU's single market.
The negotiations will be "a lot of work," Mrs Merkel said.
Any surge in government borrowing with so-called "good debt" could potentially weaken Australia's hold on its AAA credit rating because the agencies gauging the nation's budget credibility are more concerned about servicing costs than the quality of assets underpinning its debt.
The judgement of both Moody's Investors Service and S&P Global is ultimately dependent on the overall government debt burden as well as its capacity to pay interest costs, according to the agency's policy documents and a statement to The Australian Financial Review.
S&P refused to comment ahead of next month's budget on Treasurer Scott Morrison's plans to overhaul the way the government accounts for debt - partly to increase his scope to borrow for infrastructure.
However the agency's ratings methodology clearly indicates that its analysts are bound to emphasise the quantity, rather than quality, of Australia's debt.
Furthermore S&P warns in its documentation that it is particularly attuned to attempts by governments to shift debt "off budget" to flatter headline deficit numbers.
For that reason, the agency states in its key ratings policy document that changes in the "general government debt stock" as a percentage of GDP is a better indicator of "fiscal performance" than the reported deficit.
"In addition, the headline deficit is sometimes affected by political and other considerations, possibly creating strong incentives to move expenditures off budget," S&P says in its formal global sovereign rating methodology, which was last updated in late 2014.
The policy document underscores how Mr Morrison's scope to ramp up borrowing for infrastructure remains heavily constrained by the need to retain the AAA rating.
Westpac appears to have ruled out funding the controversial Adani Carmichael coal mine by limiting lending to basins that are already producing thermal coal.
After being targeted by political activists over its previous unwillingness to rule out funding Adani, including at its 200th birthday party two weeks ago, Australia's oldest bank on Friday published a climate change action plan in which it said it would limit thermal coal project lending to producing basins where the coal quality is highest - a move the bank said demonstrated support for the transition to a zero-emissions economy.
"Westpac recognises that climate change is an economic issue as well as an environmental issue, and banks have an important role to play in assisting the Australian economy to transition to a net zero-emissions economy," chief executive Brian Hartzer said in a statement.
"Limiting global warming will require a collaborative effort as we transition to lower emissions sectors, while also taking steps to help the economy and our communities become more resilient."
The announcement has already drawn rebuke from Coalition MPs, with Queensland Liberal National Party senator Matthew Canavan tweeting that Westpac has "turned its back on Queensland".
The Adani project is for Australia's largest thermal coal mine in the Galilee basin in central Queensland. The $16.5 billion mine already has state government and environmental approval. Queensland premier Annastacia Palaszczuk has said it would create "ten thousand regional jobs".
Westpac has turned its back on Qld by not supporting coal mines in North Qld. Maybe it should revert to its orginal name the Bank of NSW
— Matthew Canavan (@mattjcan) April 28, 2017
Westpac's share price is down 0.9 per cent today, but that's not out of step with the other big banks. Westpac's major competitors have all already said they will not be funding the project.
This week's best performer on the ASX200 has been Bellamy's, up more than 15 per cent on Monday's open so far.
At the start of this month, Hong Kong-based fund manager John Ho and his investment firm, Janchor Partners, were revealed to have built up a large stake in Bellamy's. Mr Ho took a position on the Bellamy's board two weeks ago as the company confirmed Andrew Coehn as its new CEO. Mr Ho has increased his holdings since.
But the stock price rise, to $5.18 shortly after the open this morning, is something of a puzzle. The company has made no announcements in a week, and no analysts have upgraded or downgraded the company in some time.
Competitor A2 Milk did have a big upgrade this week, trading at an all-time high yesterday after telling shareholders its full-year revenue will be far higher than expected as infant formula demand from China "is outstripping supply". Several analysts suggested that given A2's stock issues, Bellamy's has been able to win back some lost market share.
Bellamy's is now trading over 20 per cent above the $4.04 12-month price target of the six analysts who offer one, according to Bloomberg. No analyst currently has a 'buy' on the company.
A media analyst at Credit Suisse has described Ten Network as "un-investible" following Thursday's half-year results presentation, and gave the television broadcaster a target price of just 35 cents.
That price is still higher than the actual share price, which dropped a further 12.5 per cent this morning to 31.5 cents. This gives one of Australia's major metro broadcasters a market cap of just $117.2 million.
Ten's shares dropped nearly 20 per cent on Thursday after management revealed a $232 million loss, mostly attributed to a $214.5 million impairment on their broadcasting licence.
"We see TEN as un-investible for most investors due to operating losses and funding concerns," Credit Suisse notes.
But the big news was in its $200 million debt facility, which expires in December. The current debt is guaranteed by three shareholders - James Packer, Lachlan Murdoch, and Bruce Gordon - and they are asking for proof that things will improve before they guarantee another loan.
Credit Suisse sees nothing but red for the next three years. It estimates losses of $50 million in 2017, $43 million in 2018 and $57 million in 2019.
ResMed shares have fallen 3 per cent in early trading after the company disappointed the market's high expectations in its third-quarter results.
Revenue came in 2 per cent lower than the consensus forecast made my analysts, but earnings per share of US71¢ (up 3 per cent) was in line with estimates.
The stock has soared 22 per cent in the past year.
CEO Mick Farrell said the company's investment in cloud computing technology was driving solid growth in the medical device maker's core business.
There are now more than 3 million ResMed ventilation machines used by sufferers of sleep apnoea, which is characterised by disrupted sleep, terrible snoring and a range of associated health problems, that are connected to the cloud.
Such 'connected care' allows patients to better monitor their health and along with smartphone apps like ResMed's MyAir has helped to improve adherence to treatment schedules from 60 per cent to 80 per cent in the past three to four years, Mr Farrell said.
Sales of masks and machines, which stem from ResMed's origins in the late 80s as an innovative Australian start-up, rose 6 per cent to $US479.2 million ($641.7 million) in the quarter ended March 31. The rate of growth was 7 per cent when currency effects were excluded.
The latest set of Core Logic figures show the housing boom is over, writes Christopher Joye:
So Sydney house prices have fallen in April for the first time on a month-on-month basis since December 2015, validating last week's call that the easy-money fuelled Aussie housing boom is grinding to a halt.
According to CoreLogic's daily hedonic index—the only measure that tracks price movements on a timely basis—home values across the nation's largest metropolis have fallen 0.1 per cent in the first 27 days of April. This represents a dramatic deceleration in momentum given Sydney dwellings recorded total capital gains of 5 per cent over the March 2017 quarter alone.
A similar trend is evident across the five capital cities index, which has climbed just 0.15 per cent in April compared to a 1.2 per cent average monthly growth rate between January and March.
Another powerful real-time indicator is auction clearance rates, which tell a similar story. Clearance rates have declined for the last three weeks running, with Sydney, Melbourne, and the national market registering the weakest clearance rate last weekend all year save for the seasonally soft first seven days in February. Nationally the volume-weighted clearance rate has slumped below 70 per cent from a peak of 78 per cent two months ago.
Tatts Group has dealt would-be acquirer Pacific Consortium a blow, declaring that its revised $4.21 a share bid is not superior to the existing offer from Tabcorp.
"In these circumstances, Tatts is unable to provide due diligence or engage with the Pacific Consortium," Tatts said on Friday.
The Pacific Consortium, which includes KKR, Morgan Stanley and Macquarie Group, last week lobbed a $7.2 billion cash offer for Tatts, after a previous bid had been rejected by the Tatts board in December.
Tatts' announcement also after came after the company's major shareholder Perpetual had argued the consortium's latest and improved offer should lead to it being granted access to Tatts' books.
"We believe the Pacific Consortium bid justifies the granting of due diligence by the Tatts board," Perpetual head of equities Paul Skamvougeras told The Australian Financial Review earlier this week.
But after a "full assessment" the Tatts Group board said the consortium cannot reasonably be expected to result in a superior proposal when compared to the proposed Tabcorp merger".
Unlike Pacific Consortium's cash bid, Tabcorp, which lobbed in a bid for Tatts last year, has offered a mix of cash and shares; the Melbourne-based giant offered 0.8 Tabcorp shares for every Tatts shares, plus 42.5¢ in cash. This values the bid at $4.25 based on Tabcorp's current share price.
Tatts opened down 1.6 per cent, and is down 1.8 per cent right now. Tabcorb opened down 0.6 per cent before falling 0.8 per cent on yesterday's close. But Tatts is still trading above Tabcorp's offer price, suggesting shareholders haven't given up on the potential of another bid emerging, said CMC markets' Rick Spooner.
The big miners led the ASX lower at the open, on what's shaping up to be a slight retreat of a day.
Almost all sectors were lower as trading began, with the exception of tech stocks and utilities. Aconex was the best performer at the open, surging up 2.6 per cent.
The materials sector led the losses, with BHP down 1.9 per cent and Rio Tinto down 0.8 per cent, after both suffered in their overnight trading sessions in Europe.
Northern Star Resources led the losses, down 4.7 per cent and far from the only gold stock in the red.
Resmed, which reported its results today, is down 3.1 per cent.
The big four banks are flat to slightly down, with the exception of ANZ, up 0.2 per cent.
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Sharemarket bulls have been buoyed by Wall St's upbeat earnings season, writes IG analyst Gary Burton:
After the New York close this morning, Alphabet reported 22 per cent revenue at $US24.75 billion along with Amazon reporting revenue of $US35.7 billion. Both companies smashing the top line and seeing strong gains in aftermarket trading.
With almost half of the NASDAQ listed companies having reported 88 per cent have beaten analyst's earnings estimates (by an average of 5 per cent) with 65 per cent beating this on sales alone. Earnings have grown by a sizeable 20 per cent, so it's not hard to see why the NASDAQ remains the index of choice for the equity bulls. Consider this on top of current earnings per share coming in north of 9 per cent and it not hard to see why the US markets are flying with the DOW nudging back to 21,000 and the NASDAQ making a new high at 6050 points.
Tonight's upcoming US session looks key, with another vote on healthcare reform potentially shaping up and one should not be surprised that it is unclear if Trump gets the needed 216 votes to pass the bill. It is worth bearing in mind for the equity bears, and yes there still are few that the Dow and the S&P 500 have not closed over the highs achieved on the first of March this year. This would also be starting to interest the momentum traders who are compelled to remain long in this very bullish market.
All of this excitement may not follow through to the Aussie markets today. The local sharemarket is set to open lower with the big miners poised to retreat, with BHP dropping 4.8 per cent in London and Rio Tinto shedding 2.6 per cent.
BHP Billiton and Rio Tinto appear poised to pace the ASX lower at the open, as they reset lower with base metals.
Stoxx 600 miners dropped 2.7 per cent, paced by BHP Billiton and Glencore, as metals prices fell.
BHP dropped 4.8 per cent in London, leading the FTSE 100 lower. Glencore sank 3.2 per cent. Rio Tinto shed 2.6 per cent.
Copper and zinc pressured commodities in London. The spot price of iron ore dipped 0.3 per cent to $US66.42 a tonne. Oil slid too - down 0.3 per cent to $US51.68 a barrel
"We are short on base metals currently. On the fundamental side I think that the market is getting worried about the tightening monetary process in China, which has just begun. There will be concrete evidence of an economic slowdown in the months ahead," said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.
LME aluminium and LME copper were both lower, shedding 2.0 per cent and 0.4 per cent overnight respectively.
President Donald Trump announced he is moving forward with a renegotiation of the North American Free Trade Agreement after all, following a dramatic show of brinkmanship. But NAFTA's not in the clear yet.
Washington, Mexico City, and Ottawa were abuzz with speculation Wednesday that Trump would start the process for pulling out of the 23-year old trade pact, after Politico reported the White House was considering an imminent withdrawal.
In phone calls late Wednesday, Trump reassured Canadian Prime Minister Justin Trudeau and Mexican President Pena Nieto he wouldn't pull out of the pact. But not before the reports of a possible withdrawal stirred anxiety in Ottawa and Mexico City, causing the peso to plunge. The White House notably didn't swat down Wednesday's reports, and merely said it wouldn't comment on rumors.
Trump cleared up the matter during remarks from the Oval Office with Argentinian President Mauricio Macri Thursday. "I was going to terminate NAFTA two or three days from now," but Mexico asked him to renegotiate instead, he said. "I decided rather than terminating NAFTA, which would be a pretty big, you know, shock to the system, we will renegotiate," he added.
However, he didn't rule out scrapping NAFTA in the future. "Now, if I'm unable to make a fair deal, if I'm unable to make a fair deal for the United States, meaning a fair deal for our workers and our companies, I will terminate NAFTA. But we're going to give renegotiation a good, strong shot," he said.
Trade experts say repealing NAFTA, which links the U.S., Canadian, and Mexican economies, would disrupt all three economies. Thirty-eight U.S. states rely on Canada and Mexico as their largest foreign markets. U.S. trade with Canada and Mexico totals nearly $1.2 trillion per year, almost double that of U.S. trade with China.
Wednesday's drama may have been a negotiating stunt. But some observers suggested the move was aimed not only at a foreign audience - Ottowa and Mexico City - but a domestic one: Congress. Canada and Mexico have been ready for weeks to begin negotiations on updating NAFTA. It's the United States that hasn't been able to start the talks because it doesn't have its trade representative in place.
Under U.S. law, the U.S. trade representative must formally notify Congress that the administration will begin renegotiations, starting the clock on a 90-day period before the talks can begin. But the confirmation of Trump's nominee, Robert Lighthizer, has been held up for months amid disagreement over a waiver Senate Democrats say he needs due to his past work for foreign governments. The Senate Finance Committee confirmed Lighthizer Tuesday, along with the waiver. Now he awaits confirmation by the full Senate. Trump's gambit might have been a way of pressuring the Senate to move quickly and confirm him.
The Nasdaq ended at a record high for a second session overnight, boosted by results-related gains in Comcast, PayPal and Intuit, while the S&P 500 and the Dow were little changed.
The tech-heavy index is likely to extend its record-breaking string of gains as heavyweights Amazon and Alphabet jumped more than 4 per cent each after the bell, following stellar earnings.
Earnings were back in the spotlight, a day after the Trump administration unveiled its tax reform priorities without details on how the reform would be paid for, raising questions on whether deficit hawks in Congress would support it.
Comcast rose 2.1 per cent as strong subscriber growth brought a forecast-beating profit.
Overall profits of S&P 500 companies are estimated to have risen 12.4 per cent in the first quarter, the most since 2011, according to Thomson Reuters I/B/E/S.
"Most folks were expecting a build in earnings acceleration and that's what we've got. Despite all the economic and geopolitical noise, ultimately the market has been responding to improving earnings," said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
He said a premium has been built into stock prices on bets of tax reform and other policies expected from the Trump administration, so "when that is in question you see a sideways action."
US businesses would mostly benefit if President Donald Trump's plan to cut corporate tax rates and slash taxes on cash parked overseas becomes law. But the economic benefits and the timing of a possible bill remain in question.
In after-hours trading, Amazon added 4.1 per cent while Google's parent Alphabet jumped 4.5 per cent as both continue to race to $1000 a share.
Alphabet jumped as Google's ad revenue rose 18.8 percent to $21.41 billion in the first quarter, while Amazon reported revenue and profit that topped analysts' estimates.
In regular market hours, Intuit rose 8.5 per cent after it reported consumer tax-season results and reiterated its quarter and full-year forecast. PayPal shares hit a record high a day after it raised its earnings outlook and reported higher-than-expected quarterly profit. Sportswear maker Under Armour shares jumped 9.9 per cent after it posted a smaller-than-expected quarterly loss.
Energy was the biggest decliner among the 11 major S&P 500 sectors, falling 1.1 pe rcent on the back of a 0.8 pe rcent decline in US crude futures.
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