Admittedly, the latest comments by President Donald Trump’s on tax had been vague at best. In a meeting with US airline CEOs, President Donald Trump highlighted that the something “phenomenal” with regards to tax could be announced over the “next two or three weeks”. This had also been reinforced by White House spokesman Sean Spicer, citing a comprehensive tax plan that would cover both businesses and individuals.
The long-awaited tax reforms plans appear to be seeing some light, and it is no surprise to see the markets cheering. As one would recall, the proposed plans by the President and House republicans had been misaligned and expectations had not been high on a quick-fix in ironing out the differences.
The S&P 500 had popped above 2,300 overnight and touched a fresh high of 2310.37, still respecting the ascending channel-resistance. Financials took the lead after three consecutive sessions of decline since last Friday’s Dodd Frank order and clocked 1.37% gains. With this latest comment, the markets could see sustained support in the timeline of the next two or three weeks as the anticipation builds for the tax plans.
This jab of optimism had reached the shore of the Asia-Pacific region on Friday with early movers including the Nikkei 225 and KOSPI clocking strong gains. The former helped also by the sharp up-move in USD/JPY.
For the HSI, which has seen strong interest both via China and beyond on improving macroeconomic conditions in the Asian region, the overnight leads is likely help prices continue on its recent rally. Optimism also holds strong ahead of China’s January trade report.
With both the Nikkei 225 and HSI slated for a day of strong performance, the local STI could inch up to test the 3100 level, barring significant disappointments from China’s trade numbers. Little market reactions had been garnered in the day prior towards the Committee of Future Economy’s (CFE) recommendations.
Meanwhile Japan’s January Producer Price Index (PPI) surprised on the upside at 0.6% month-on-month (MoM) and 0.5% year-on-year (YoY) this morning. USD/JPY continue to hold high ahead of US President Donald Trump and Japanese Prime Minister Shinzo Abe’s meeting today. The market is likely to place a strong focus on the outcome of this meeting. Eyes on China’s January trade data due in the day while the loans conditions for the same month may be due any time between 10-15 February.
Yesterday: S&P 500 +0.58%; DJIA +0.59%; DAX +0.86%; FTSE +0.57%