Article / 27 April 2017 at 7:00 GMT

Morning Markets: Trump tax plan disappoints, Draghi up next

Head of Editorial Content / Saxo Bank
Denmark





Morning Markets


Watchlist

  • Italy: Business confidence survey and consumer confidence survey (0800 GMT)
  • EU: Business climate indicator and economic sentiment indicator (0900 GMT)
  • Eurozone: ECB interest-rate announcement (1145 GMT)
  • Germany: Provisional CPI (1200 GMT)
  • US: Advance report on durable goods (1230 GMT)
  • US: Weekly jobless claims (1230 GMT)
  • Canada: Payroll employment, earnings and hours (1230 GMT)
  • US: Pending home sales index (1400 GMT)
  • US: EIA weekly natural gas storage report (1430 GMT)

US shares tumbled as details of the long-awaited "Trump tax plan" emerged Wednesday, with the president outlined a reduction of the corporate tax rate from 35% to 15% as well as a simplification of individual tax policy that the administration claimed would spur growth.

Investors, it would appear, were seeking more detail from the Trump administration; there is also the fact that Treasury secretary Steven Mnuchin was unable to guarantee that the programme would be revenue-neutral, which could limit its staying power.

In forex, the CAD and MXN gained ground upon Washington's announcing that it does not seek to exit the North American Free Trade Agreement "at this time", but Trump's qualified stance regarding the longstanding agreement continues to weigh on grains prices.

Today's Asian session saw the Bank of Japan hold interest rates steady while the European Central Bank is set to make its own policy announcement at 1145 GMT. From Frankfurt, markets will be looking for potential details on the bank's QE tapering plans as EURUSD hits five-month highs.

European stocks are expected to open lower today on the back of Wall Street's taxation-led rollback.

Market signals

Asian session

  • Disappointment with Trump's tax reform plan weighed on Wall Street
  • Asian markets opened down in early trade on the US' lower close
  • The Nikkei 225 lost ground, closing down 0.19% at 19.251.87
  • The BoJ kept its monetary policy settings unchanged, but trimmed its inflation forecast
  • Korea's Kospi Composite edged higher, gaining 0.15% to 2,211.08
  • South Korea's GDP reached a solid 2.7% in Q1, beating expectations of 2.6% growth
  • A crackdown on shadow banking could prompt a selloff in Chinese bonds and equities
  • Australia's S&P/ASX200 eked out gains; it closed up 0.16% at 5,921.30
  • Australia's quarterly import prices rose 1.2% in the March quarter
  • Opec will meet with Russia to push for extended crude production curbs
  • The US has stressed using diplomatic rather than military pressure on Pyongyang
  • A blast, probably from an Israeli airstrike on Hezbollah ammunition, has skaken Damascus

Forex ahead

  • USDCAD spikes sharply lower, tumbling nearlyu one big figure from the 1.3635 area
  • USDJPY makes slow gains overnight as it heads for the 111.50 area
  • EURUSD off highs at 1.0950 but still elevated into today's ECB outing at 1.0904
  • GBPUSD continues steady upward grind towards 1.29 handle

From the Floor

Unmoved. "We saw a very limited reaction in USDJPY after the BoJ's outing," says Norup

Sudden calm. "We are seeing the French election momentum fade in equity markets," says Garnry

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

1... 2... 3
The Eurozone’s Business Climate Indicator for April is expected to reaffirm that stronger growth is still a reasonable forecast for the single currency area, writes James Picerno.

NAFTA fears fallout

The rise in rhetoric about the future of NAFTA has left the Canadian dollar under pressure, says the team at Saxo APAC Sales Trading.

Not ore right
BHP shares were in focus after the company's quarterly production result disappointed,
says Saxo's Sydney trading team adding its iron-ore output had been affected by heavy rainfall.

Trump milestone
April 29 marks the first 100 days of Donald Trump's presidency, and Martin O'Rourke gives the verdict on the 10 scenarios we outlined for a Trump presidency six months ago.

Whither yields?
The ECB is not expected to change policy on Thursday, but the bank will eventually need to react to Eurozone economic momentum and yields adjust accordingly, writes Michael Boye.

Mario Draghi

Today it's Draghi's turn to impress markets. Photo: ECB webcast news conference

Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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to make sure you're up to date with the latest developments.

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