US stocks gain in anticipation of Trump tax plan

Wall Street stocks rose yesterday in anticipation of the unveiling of President Donald Trump’s long-awaited tax cut plan later in the day. Investors have been salivating for months over the prospects of lower corporate taxes, which would boost profits of blue-chip companies and other businesses considerably. Wall Street is also a fan of a cut in the personal taxes, another Trump priority expected to feature in the plan. About 20 minutes into trading, the Dow Jones Industrial Average was up 0.3 percent at 22,354.05. The broad-based S&P 500 advanced 0.3 percent to 2,501.91, while the tech-rich Nasdaq Composite Index gained 0.7 percent to 6,427.48.

Trump’s efforts to reform US health care policy have fizzled so far, raising questions about his ability to win tax reform. But the market was optimistic yesterday.

“What is apt to be missing from today’s tax plan introduction is how it gets paid for without increasing the deficit,” said Briefing.com analyst Patrick O’Hare. “That could be a potential buzz kill, but for now, the market is relishing the notion of a tax reform plan of some kind getting done soon.”

Big technology companies were strong, with Apple, Facebook, Amazon and Google-parent Alphabet all climbing about one percent or more. Dow member Nike dropped 4.1 percent after reporting a 24 percent decline in first-quarter profits to $950 million due in part to sluggish sales in North America.

European stock markets edged higher yesterday as the dollar continued its advance against the euro and the pound, after further hawkish comments from US Federal Reserve Chair Janet Yellen. In Europe, the FTSE 100 index of leading British shares was up 0.4 percent at 7,312 while Germany’s DAX rose 0.5 percent to 12,664. The CAC 40 in France was 0.2 percent higher at 5,278. US stocks were poised for a solid opening too with Dow futures and the broader S&P 500 futures 0.2 percent higher.

The dollar has been one of the main drivers across financial markets in recent days. The US currency has been largely buoyed by expectations of further interest rate rises from the Fed. In a speech Tuesday, Yellen indicated that it would not be prudent to leave rates on hold until inflation reaches 2 percent. The rise in the dollar makes European goods more competitive in US markets.

Yesterday, the euro was down 0.5 percent at $1.1734 while the pound fell 0.5 percent to $1.3396. “While this doesn’t mark a change in the message delivered last week, it does reinforce the view that tightening will continue despite inflation running below target and currently showing little sign of improving,” said Craig Erlam, senior market analyst at OANDA.

Asian stock markets turned mostly lower yesterday as investors awaited the outlines of US tax overhaul plans by President Donald Trump while news headlines on geopolitical tensions surrounding North Korea have quieted. Japan’s Nikkei 225 fell 0.3 percent to 20,267.05 and South Korea’s Kospi dipped less than 0.1 percent to 2,372.57. Tokyo shares closed slightly lower yesterday, with traders on the sidelines ahead of key events including the unveiling of Donald Trump’s tax reforms and the release of Japanese economic data later in the week.

The bellwether Nikkei 225 index slipped 0.31 percent, or 63.14 points, to close at 20,267.05. The broader Topix index ended down 0.50 percent or 8.31 points at 1,664.43. A relatively cheaper yen offset some of the downward pressure on the market, analysts said. The dollar fetched 112.46 yen in Tokyo, up from 112.23 yen in New York. After a round of selling in early Tokyo trade, bargain hunters came in to provide support for the market, Okasan Online Securities said in a commentary. “In the afternoon session, investors’ wait-andsee attitude became more pronounced, as they waited for the release of the US tax reform proposal,” Okasan said. Any hints about the deal could provide clues for the global market, analysts said.

“Officially not due to be released until tonight but prone to be comprehensively leaked during our morning, the US administration and Republican leadership are slated to jointly reveal their framework for tax reform yesterday,” National Australia Bank’s head of FX Strategy Ray Attrill said in a client note.

Australia’s S&P/ASX 200 lost 0.1 percent to 5,664.30. But Hong Kong’s Hang Seng index rose 0.4 percent to 27,615.85. China’s Shanghai Composite Index was flat at 3,344.23. Stocks in Southeast Asia were mixed. Benchmark US crude rose 38 cents to $52.26 per barrel on New York Mercantile Exchange. The contract slid 34 cents to finish at $51.88 a barrel on Tuesday. Brent crude, the standard for international oil prices, gained 27 cents to $58.19 a barrel in London. It gave up 51 cents to $57.92 a barrel in London on Tuesday. The dollar rose to 112.66 yen from 112.23 yen. The euro fell to $1.1757 from $1.1791. — Agencies