Trump said last month his administration planned to produce a resolution calling for a 10 percent tax cut for middle-income households.
“Everyone still remembers strong equity rallies after Trump was elected two years ago. So initially stock markets will gain,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“But further tax cuts would boost already large fiscal deficits and push the 10-year U.S. Treasuries yield above its October high almost instantly. Given rises in U.S. bond yields triggered a correction in equities last month, any rally in stocks is unlikely to last long,” he added.
The 10-year U.S. Treasuries yield stood at 3.201 percent US10YT=RR, maintaining most of its gains following Friday’s strong U.S. jobs and wage data and staying not far from its 7 1/2-year peak of 3.261 percent hit on Oct. 9.
• “Global equities have recovered after their fall in February, which was triggered by a rise in U.S. yields. But this time a recovery will likely be capped because now markets do not have the support they had back in February from tame inflation and the economic boost from Trump’s tax cuts,” said Shuji Shirota, head of macro-economic strategy at HSBC in Tokyo.
Many investors also expect Trump to continue to take a hard line on trade, regardless of the outcome of the elections.
“The impact of trade war will start to appear in U.S. economic data in coming months,” Shirota added.
.png)
• Stocks in Europe opened higher Tuesday morning as investors shrugged off concerns of political uncertainty surrounding a key vote in the United States.
The pan-European Stoxx 600 is up 0.12 percent and all major indexes opened higher.
Investors across the glove will be watching U.S. voters head to the polls in the midterm elections scheduled for Tuesday, which could send ripples throughout capital markets.
.png)
• Asian shares wavered on Tuesday with sentiment tempered ahead of the U.S. midterm elections, the first major electoral test of President Donald Trump’s big tax cuts and hostile trade policies.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged down 0.1 percent, weighed by a fall in Chinese shares and technology stocks while Japan's Nikkei .N225 managed to gain 1.0 percent.
• Japan’s Nikkei average rebounded on Tuesday, tracking gains in Wall Street, while Apple suppliers fell on a report that the tech giant has scrapped plans to boost production of its new iPhone XR.
Toyota Motor surged 2.1 percent after the company raised its full-year operating profit forecast by 4.3 percent to 2.4 trillion yen from the previously 2.3 trillion yen and said it would buy back up to 250 billion yen of its own shares.
The Nikkei rose 1.1 percent to 22,147.75, recouping much of Monday’s 1.6 percent drop.
• China stocks ended lower on Tuesday despite a recent string of policy moves to support falling markets amid concerns over the possible impact of a new technology board, and as investors waited to see the impact of the new policies.
At the close, the blue-chip CSI300 index was down 0.6 percent at 3,243.15, while the Shanghai Composite Index lost 0.2 percent to 2,659.36 points.
Thai
Eng