Dollar rallies on Trump tax pledge
LONDON: The dollar extended a rally yesterday on comments by US President Donald Trump that he would release details of a “phenomenal” tax-cut plan, which also lifted global stock markets. Japan’s Nikkei index led the advance, piling on 2.5 percent as the yen sank, while a forecast-busting trade report from China also lifted spirits in Hong Kong and Shanghai, dealers said. European markets were also up, with London receiving a boost also from far better-than-expected UK industrial production data.
At a meeting Thursday with airline executives, Trump said he would release details of a “phenomenal” tax cut plan in the next two or three weeks. The news sent a rocket through Wall Street, where all three main indices ended at record high levels, and the dollar powered higher. They continued rising at the opening bell yesterday, with the Dow gaining 0.2 percent. “US equities are adding to yesterday’s rally following a promise of a “phenomenal” tax plan in the next 2-3 weeks by President Donald Trump, helping ease heightened trade and immigration concerns,” said analysts at Charles Schwab brokerage.
World stock markets surged in the two months after Trump’s November election win, buoyed by his promises to slash taxes, hike infrastructure spending and cut red tape to fan economic growth. But in the three weeks since he took office, sentiment has been consumed largely by a series of controversial Trump measures and comments, particularly over trade, that left dealers worried that his domestic agenda had been put on the back burner.
“Trump has started making the right noises again as far as markets are concerned, with Thursday’s promise of a ‘phenomenal’ tax announcement in the coming weeks certainly hitting all the right notes,” said Craig Erlam, senior market analyst at Oanda trading group. “Investors have become a little apprehensive in recent weeks due to the unpredictable nature of Trump’s policies and the timing of the announcements which has taken the edge of moves we saw heading into year-end.”
Elsewhere yesterday, oil prices rose as the International Energy Agency watchdog said OPEC countries are largely complying with a landmark deal to reduce the global oil glut. In a monthly update, the IEA added that oil demand was likely to be more vigorous than anticipated this year.