The dollar and U.S. bond yields rose on Thursday after President Donald Trump proposed the biggest U.S. tax overhaul in three decades and as strong U.S. economic data supported the case for a Federal Reserve rate hike later this year.

The dollar’s strength pressured many emerging market currencies and bonds, helping drag down MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS 0.4 percent to one-month lows. South Korean 10-year yields hit a 2-year high.

In contrast, Japan’s Nikkei .N225 rose 0.55 percent, taking cues from gains on Wall Street, where the Dow Jones Industrial Average .DJI rose 0.25 percent while the S&P 500 .SPX gained 0.41 percent.

Small-cap U.S. shares, seen as benefiting the most from the proposed tax cuts, soared, with the Russel 2000 small-cap index notching a record high, rising 1.9 percent for its biggest one-day gain in almost six months.

“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.

Also helping to boost the dollar, the plan included lower one-time low tax rates for companies to repatriate profits accumulated overseas, which analysts say would lead to a temporary phase of sizable dollar buying.

European stock futures suggested gains for those markets too, with FTSE futures FFIc1 up 0.18 percent and German DAX futures FDXc1 up 0.25 percent.

Source: Reuters