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FTSE rallies as investors eye profits from US tax cuts

FTSE 100 and global markets rally on prospect of boost to profits from US tax cuts expected to be passed this week.

 
FTSE rallies as investors eye profits from US tax cuts
 

The FTSE 100 and global markets have rallied as investors eyed big boosts to corporate earnings from US president Donald Trump's tax cuts, due to be passed this week.

The UK blue-chip index rose 30 points, or 0.4%, to 7,520, while European markets were also higher. The German DAX 30 was up 1.2%, as was France's CAC 40.

US tax reforms are likely to be passed this week, after reworking of the measures that brought further Republican senators on board.

Corporate taxes will now fall from 35% to 21%, rather than the original 20% targeted, while the one-off  'deemed repatration' charge on companies bringing in cash from overseas will be set at 15.5%.

This is up on the 10% rate that had previously been proposed, though much lower than the current 35% rate.

'It might be a bit later, but there were signs of a tax-bill inspired Santa rally this morning,' said Connor Campbell, financial analyst at Spreadex.

'With Senate and House Republicans coming to an agreement over the weekend, and the prospect of the tax bill being passed later this week - giving Trump his first major victory since taking office in January - the markets were in party mode this Monday.'

The day's big movers were outside the FTSE 100, however, with spread betting firms tumbling on a clampdown from the European financial regulator on the sale of binary options and contracts for differences.

IG Group (IGG) fell to the bottom of the FTSE 250, down 9.4% at 664.5p, while CMC Markets (CMCX) was rooted to the bottom of the FTSE Small Cap index, 13.3% lower at 145.5p. On the Alternative Investment Markets, Plus500 (PLUSP) fell 14.6% to 790p.

 

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