Asian shares were firm on Thursday while U.S. bond yields and the dollar held sizable gains made the previous day after President Donald Trump proposed the biggest U.S. tax overhaul in three decades, Reuters reported.
The dollar also drew support from strong U.S. durable goods orders data that cemented expectations the Federal Reserve is on course to raise interest rates for the third time this year in December.
On Wall Street, small-cap shares, seen as benefiting the most from the proposed tax cuts, soared.
Russel 2000 small-cap index notched a record high, rising 1.9 percent for its biggest one-day gain in almost six months.
The Dow Jones Industrial Average .DJI rose 0.25 percent while the S&P 500 .SPX gained 0.41 percent.
“The fact that Trump made the tax proposal was seen as a step forward,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
Trump offered to lower corporate income tax rates, cut taxes for small businesses and reduce the top income tax rate for individuals.
The proposal faces an uphill battle in Congress, however, with Trump’s own party divided, and the plan already prompting criticism that it favors the rich and companies and could add trillions of dollars to the deficit.
“It is hard to expect this proposal to pass the Congress smoothly. We have to pay attention to how the Republicans will view this,” said Takafumi Yamawaki, chief fixed income strategist at J.P. Morgan Securities.
“It is possible that the net fiscal deficit spending will be smaller than what the stock markets expect,” he added.
In the currency market, as the dollar broadly gained, the euro EUR= hit a six-week low of $1.1717 on Wednesday and last traded at $1.1752, having shed 1.7 percent so far this week.
The dollar also shot up to a 2-1/2-month high of 113.26 yen JPY= the previous day and was last fetching 112.78 yen.