Asian shares rise ahead of US tax plan

The Gulf Today - Business - - Front Page -

SYD­NEY: Shares rose on Wed­nes­day as in­vestors hoped for progress on ma­jor tax re­form in the United States, while the dol­lar hov­ered near one-month highs on grow­ing ex­pec­ta­tions of a US in­ter­est rate in­crease in De­cem­ber.

Euro­pean stock fu­tures and Dax fu­tures climbed 0.3 per cent each while FTSE fu­tures gained 0.2 per cent.

MSCI’S broad­est in­dex of Asi­a­pa­cific shares out­side Ja­pan added 0.1 per cent, af­ter fall­ing for four straight days to a three-week trough.

The Trump ad­min­is­tra­tion and Repub­li­cans in Congress are due to out­line a tax plan on Wed­nes­day. If passed, it would be the first sig­nif­i­cant leg­isla­tive vic­tory for US Pres­i­dent Don­ald Trump since tak­ing of­fice in Jan­uary.

It would also be a win for Wall Street as cor­po­rate tax cuts would po­ten­tially boost com­pany prof­its, while a tax amnesty on off­shore cash holdings could fuel share val­ues as well as de­mand for the dol­lar.

“We’re now see­ing some em­bry­onic prospects of a tax re­form in the United States which is a much big­ger is­sue for the mar­kets than the Fed­eral Re­serve,” said Ray At­trill, Syd­ney-based global head of forex strat­egy at Na­tional Aus­tralia Bank.

“Our view has been the mar­ket had moved from ap­ply­ing a Trump pre­mium from Novem­ber-de­cem­ber to ap­ply­ing Trump dis­count due to his in­abil­ity to pass any ma­jor re­forms. A mean­ing­ful tax re­form could serve to re­duce some of that dis­count.” An­a­lysts said the US tech space will be one to watch as it has moun­tains of cash that could be repa­tri­ated for share buy­backs and div­i­dends.

Wall Street ended mostly flat on Tues­day, but the tech sec­tor gained 0.4 per cent, with Ap­ple shares ris­ing 1.7 per cent af­ter four ses­sions of de­clines.

China’s CSI 300 in­dex rose 0.3 per cent on Wed­nes­day, while Ja­pan’s Nikkei was off 0.3 per cent, with some stocks trad­ing ex-div­i­dend.

In cur­ren­cies, the dol­lar in­dex last stood at 93.17 from 93.286 touched on Tues­day, the high­est since Aug. 31. Mar­kets were put on no­tice by Fed­eral Re­serve Chair Janet Yellen who used a Tues­day speech to warn it would be “im­pru­dent” to keep pol­icy on hold un­til in­fla­tion is back to 2 per cent. She said the US cen­tral bank “should also be wary of mov­ing too grad­u­ally” on rates.

Atlanta Fed chair Raphael Bostin also talked up the prospect of a De­cem­ber rate hike. The dol­lar also climbed on the yen to loi­ter near a 2-1/2 month high at 112.48, helped by ris­ing US Trea­sury yields.

The yield on 2-year Trea­sury notes, which rises with traders’ ex­pec­ta­tions of higher Fed fund rates, touched 1.4590 per cent, a level not seen since Oc­to­ber 2008.

Nigel Travis (cen­tre), Chair­man and CEO of Dunkin’ Brands, at­tends the open­ing bell cer­e­mony at Nas­daq on Wed­nes­day.

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