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Time for Trump to deliver on his tax promises

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US equity markets continues their sharp jump higher in anticipation of the Trump administration’s tax reform announcement, with the tech-focused Nasdaq trading above 6,000 for the very first time, while both the S&P500 and Dow Jones indices move closer to their respective all-time highs.

Accendo Markets Analyst, Mike van Dulken commented – “Strong Q1 earnings performances from Caterpillar, McDonald’s and DuPont led the Dow over 200 points higher, while the Materials sector led the S&P to within 20 points of a fresh high.”

The FTSE started this morning at a loss, dipping back 0.2%, while the DAX and CAC both slipped 0.1% after the bell.

Spreadex Analyst, Connor Campbell noted – “Of course, following 2 days of record-breaking growth such meagre losses don’t radically challenge the sense of optimism that has taken hold since the French election result was revealed. Yet with precious little data for the European indices to grapple this Wednesday, attention is going to be kept, somewhat detrimentally, on this evening’s US tax plan tell-all.”

In focus today is the long awaited Trump Tax announcement, although with suggestions of a 10% repatriation tax for overseas cash and a 15% corporation tax already out in the open, the risk is that the financial markets will be left wanting, yet again.

Connor Campbell suggested – “To satisfy the markets, which are broadly at or near all-time highs, the announcement will have to be heavy on detail, avoiding the bombastically vague promises that have tended to typify the White House’s recent communications.” while an ADS Securities spokesperson added – “Stock investors have already begun buying equities in anticipation of the tax announcement. The consensus sentiment is that any kind of tax reduction Trump introduces will free up corporate capital for re-investment and this should improve valuations even more, hence the fresh demand for stocks, which conveniently comes during the Quarterly Earnings season in the US.”

Results-wise, Standard Chartered’s Q1 update is due out at 9.30am while GlaxoSmithKline reports at midday. US earnings season sees another plethora of results on the slate including Boeing, PayPal, PepsiCo, Proctor & Gamble and Twitter.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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