28.09 - Trump's tax plan brings optimism to markets
Markets are optimistic today as they focus on President Trump’s ambitious tax plan. The Dollar is trading steady today at 1-month high levels, there’s plenty of data coming out of the U.S. today including fresh GDP reading and weekly unemployment claims. Meanwhile, Oil prices continue their good momentum, and Toshiba $18 billion deal is officially signed. Here are the headlines that will make today’s trading day.
Global financial markets continued to digest U.S. President Donald Trump's long-awaited tax reform plan.
The framework proposed bringing the corporate tax rate to 20% from 35% and reducing the highest individual income tax rate to 35% from 39.6%.
Despite market optimism, the proposal still faces an uphill battle in Congress, with the Republican party divided over it and Democrats hostile.
Asian shares closed on a relatively mixed note, with Japan's Nikkei ending higher, while Chinese markets experienced selling pressure ahead of a week-long holiday.
In Europe, shares drifted up a bit in mid-morning trade, as gains in financial stocks provided support.
Meanwhile, U.S. stocks pointed to a muted open on Wall Street, with the major benchmarks little changed after Wednesday's rally.
The dollar and Treasury yields continued this week's rise, underpinned by optimism over the health of the U.S. economy and President Donald Trump’s tax-cut plan as well as growing expectations of a Federal Reserve rate hike in December.
The dollar index, which measures the currency against a basket of six major currencies, was at 93.24. It touched a high of 93.50 at one point, its strongest level since Aug. 23.
Meanwhile, U.S. bond yields jumped, with the yield on two-year notes reaching a 9-year high of 1.49%, while the 10-year yield rose to 2.35%, its highest in more than two months.
Investors awaits final figures on U.S. second-quarter economic growth 12:30 GMT. The data is expected to show that the economy grew at a 3.0% annual rate in the April-June quarter, improving sharply from growth of 1.4% in the first quarter.
Besides the GDP report, today's calendar also includes weekly data on initial jobless claims also at 12:30 GMT.
On the Fed front, comments from soon-to-depart Fed Vice Chair Stanley Fischer at 14:15 GMT will garner some attention. Kansas City Fed President Esther George and Atlanta Fed chief Raphael Bostic are also on the agenda.
Interest rate futures are now pricing in about an 80% chance of a December Fed rate hike.
Meanwhile, Crude oil prices edged higher, with the U.S. benchmark roaring back into bull market territory as traders cheered ongoing signs that the market is starting to rebalance.
Oil prices have gained roughly 20% from their June lows, meeting the definition of a bull market, as data showed strong compliance from major producers with their supply cut agreement and as talk grows of a likely extension of the deal.
After long negotiations, Japan's Toshiba Corp said it had signed an $18 billion deal to sell its chip unit to a consortium led by Bain Capital LP, overcoming a key hurdle as it scrambles for funds to stave off a potential delisting.
Toshiba reached a deal with the group, which includes Apple, Dell Technologies, Seagate Technology, Japan’s Hoya Corp. and South Korea’s SK Hynix.
The unit will remain a Toshiba affiliate even after the deal’s completion.
- by Roger Gain