Article / 24 February 2017 at 8:00 GMT

Morning Markets: Trump's tax talks could set the trend

 

Watchlist

  • France: February consumer confidence (0745 GMT)
  • Italy: December 2016 industrial orders and sales (0900 GMT)
  • Italy: business and consumer confidence (1000 GMT)
  • US: January new home sales (1500 GMT)
  • US: February consumer sentiment (1500 GMT)

Let foreign corporations pay is basically what US president Donald Trump told Reuters in an interview. Ahead of a February 28 speech to congress, in which he is to outline his tax plan, Trump he stresses that his border adjustment tax is to support the US while companies abroad would carry the burden. 

"So what is going to happen is companies are going to come back here, they’re going to build their factories and they’re going to create a lot of jobs and there’s no tax,” he told Reuters. Imports used for production shall become more expensive, while input from the US is to become cheaper. 

However, it seems president Trump is not taking into account that such a tax regime change would affect the US dollar as well, which could mean import tax and export subsidies could cancel each other out

In the interview he also targeted a corporate tax rate of 15% to 20% and said the US should lead when it comes to the arsenal of nuclear weapons.

Major US markets seem still to be mainly positive when it comes to the new US president. The S&P500 and the Dow closed in the green again on Thursday, however, the Nasdaq Composite slipped. In Europe, the Dax and FTSE100 fell.

Less important European data will be published today, but as Europe remains nervous, figures from France and Italy might be of some interest to investors. The full European sentiment report will be published next week. 

Market signals

Asian session

  • Asian markets headed lower, following a mixed performance on Wall St on Thursday
  • The Nikkei 225 lost ground; it closed down 0.45% at 19,283.54
  • Toshiba may put its troubled Westinghouse business into bankruptcy
  • The Shanghai Composite was down 0.41% to 3,238.17 at 0548 GMT
  • Hong Kong's Hang Seng was down 0.48% to 23,999.38 at 0549 GMT
  • South Korea's Kospi Composite was down 0.77% to 2,091.41 at 0545 GMT
  • Copper prices retreated on renewed worries about China's economy
  • Trump and Mnuchin give mixed signals on whether they see China as a FX manipulator
  • RBA head Philip Lowe has virtually ruled out a further cut in interest rates
  • The views of the head of Australia's central bank will buoy the Aussie dollar
  • Australian miners weighed on the S&P/ASX200; it closed down 0.79% at 5,739.00
  • North Korea says Beijing is "dancing to the US tune" in banning its coal

Forex ahead

  • The US dollar lost ground on expectations of a delay in fiscal stimulus spending
  • USD was worth just ¥112.857 at 0550 GMT
  • The Australian dollar burst through resistance at 0.77 on USD weakness
  • The Aussie dollar was worth  0.7712 at 0547

From the Floor

Sterling strong. “Yesterday we saw sterling gaining and breaking above a short-term range,” says John J Hardy.

Precious. “We see precious metals continuing the good run that they have had so far this year – not least silver,” says Ole Hansen.

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

In opinion

1...2...3

There are misconceptions about the rise in populism in both Europe and the US, and the political trend could even be advantageous to investors, says Juhani Huopainen

Iron ore tumble

Iron ore futures have taken a tumble on expectations of an increase in supply from India, says the Sydney-based team at Saxo Capital Markets Australia.

Chart in Trump times

Kim Cramer Larsson in this webinar explains chart technique looking at the latest developments from a chart perspective as the Donald Trump US presidential era evolves.

A rocking Fed

Reaction to the latest FOMC was muted, now its Trump's February 28 speech that should be watched closely, according to Neil Staines.


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 A bridge linking China with North Korea  ... In a rare show of animosity against its neighbour, Pyongyang has criticized Beijing's import ban on its coal. Photo: Shutterstock

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2y
Ironeyelid Ironeyelid
I have read your comments. Trump can only simply talk but has not power at all over taxes as this is a congressional issue. One cannot influence their investment strategy based on Trump's conversation. Just thoughts...
2y
Ironeyelid Ironeyelid
We all expect much more from Saxo that giving analysis on the fringe of the weakness of someone's conversation. Conversation can never effect any long term stability or any other unstablie environment. It is and always is "about the money and assets.' Please do not translate this as offensive to you but rather to expand your thinking.

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