Stock markets’ welcome for Trump tax plans fades
LONDON: A rebound in sentiment after US President Donald Trump unveiled market-friendly tax cut plans proved short-lived as Wall Street stocks opened lower on Thursday.
In Europe, equities were mixed in midday trading, while Asian indices struggled to track Wall Street’s Wednesday gains, despite a broad move back to riskier assets like equities.
“US stocks are lower in early action, coming off the modest rebound yesterday, with the markets grappling with increased Fed rate hike expectations and scrutiny of yesterday’s release of tax reform details,” said analysts at Charles Schwab stock brokerage.
After months of waiting, Trump released a tax reform blueprint that would slash corporate rates, provide relief for firms that repatriate cash from overseas, and reduce the number of tax brackets from seven to three.
The tycoon described it as “the largest tax cut, essentially, in the history of our country”.
House Speaker Paul Ryan said it was “a once-in-a-lifetime opportunity that is all about more jobs, fairer taxes and bigger pay checks for American families”.
Trump’s promise to reduce taxes, ramp up infrastructure spending and slash red tape helped drive a global market rally in the months after his November election win.
But those gains fizzled as his legislative agenda suffered a series of blows and his White House has become embroiled in a host of crises.
The bill is expected to face a tough passage through Congress, with both sides of the aisle likely to question its affordability, while it received a mixed review from economists, and business and union leaders.
“Though Trump’s tax announcement was an important first step in terms of the President delivering on one of his most market-pleasing policies, the abject failure of the Republican attempt to repeal Obamacare means that investors are wise to be cautious about getting too excited at this early stage,” said Spreadex analyst Connor Campbell.
The lower open on Wall Street came despite the Commerce Department revising up its estimate for growth by the US economy by a tenth of a percentage to 3.1 percent in the April-june period on an annualised basis.
Wall Street stocks retreated early Thursday as some of the euphoria from the release of President Donald Trump’s tax cut proposal started to fade.
Stocks had rallied on Wednesday as Trump and Republican leaders released a long-awaited outline of a proposal to cut the corporate tax rate from 35 percent to 20 percent amid a broader overhaul of the system.
A currency trader works at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, on Thursday.