By IFCMarkets
US stocks advanced on Wednesday as President Donald Trump and congressional Republicans announced a tax overhaul proposal. The dollar strength persisted: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, gained 0.5% to 93.428. The S&P 500 jumped 0.4% settling at 2507.04 led by financial shares. The Dow Jones rose 0.3% to 22340.71 with gains in JP Morgan offsetting 1.9% drop in Nike. Nasdaq composite jumped 1.2% to 6453.26.
Treasury yields and bank stocks rose after President Trump and Republican leaders presented proposal to cut the top corporate tax rate to 20% from 35%, cut taxes for small businesses and reduce the top income tax rate for individuals as part of an overhaul of the US tax code. Expected tax cuts is a fiscal stimulus which can boost US economy. This revived the Trump reflation trade which drove the stock market rally as President Trump pledged to enact stimulus measures such as tax cuts, infrastructure spending programs and deregulation during election. Two more Fed officials spoke about their view on monetary tightening after Fed chair Yellen said on Tuesday it would be “imprudent” to leave monetary policy on hold until inflation hits the central bank’s 2% target. Louis Fed President James Bullard said there was no need for the central bank to raise interest rates soon because the US economy would stay stuck in a low-growth environment. Boston Fed President Eric Rosengren said “regular and gradual removal of monetary accommodation seems appropriate”, expressing his support for further rate hikes. Economic news were mixed: August durable goods orders jumped 1.7%, while pending home sales fell 2.6%, the lowest reading since January 2016.
European stocks extended gains on Wednesday led by bank shares. Both the euro and British Pound continued the slide against the dollar. The Stoxx Europe 600 index rose 0.4%. Germany’s DAX 30 gained 0.4% to 12657.41 helped by 1.2% gain in Siemens shares on news Alstom and Siemens agreed to merge their rail operations. France’s CAC 40 added 0.3% and UK’s FTSE 100 rose 0.4% to 7313.51. Indices opened 0.2% – 0.4% higher today.
Asian stock indices are mixed today. Nikkei rose 0.5% to 20363.11 as yen extended losses against the dollar. Chinese stocks are down on profit taking ahead of weeklong National Day holiday in China: the Shanghai Composite Index is 0.2% lower and and Hong Kong’s Hang Seng Index is down 0.3%. Australia’s All Ordinaries Index added 0.1% despite helped by gains in bank stocks and continued slide in Australian dollar against the greenback.
Oil futures prices are extending losses today. Prices fell yesterday despite US government data showing a bigger than expected 1.8 million barrels draw in crude supplies. However data showed a surprise 1.1 million barrel rise in gasoline stocks. November Brent crude lost 0.9% to $57.90 a barrel on Wednesday on London’s ICE Futures exchange.
Market Analysis provided by IFCMarkets
Free Reports:
Note:
This overview has an informative and tutorial character and is published for free. All the data, included in the overview, are received from public sources, recognized as more or less reliable. Moreover, there is no guarantee that the indicated information is full and precise. Overviews are not updated. The whole information in each overview, including opinion, indicators, charts and anything else, is provided only for familiarization purposes and is not financial advice or а recommendation. The whole text and its any part, as well as the charts cannot be considered as an offer to make a deal with any asset. IFC Markets and its employees under any circumstances are not liable for any action taken by someone else during or after reading the overview.