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Category: Business, Economics and Finance / Company News / Markets / Currency / Futures / Stockmarket

Wall Street hits record high after Trump says tax announcements soon

Friday, 10 Feb 2017 06:19:07 | Rebecca Hyam

Markets are hoping Mr Trump will at last provide long-awaited details on his fiscal plans. (Reuters)

US markets have rallied to a record high after comments by US President Donald Trump that he will be making a "phenomenal" tax announcement in the coming two to three weeks.

Markets at 8:15am (AEDT):

  • ASX SPI 200 futures +0.4pc to 5,634
  • AUD: 76.3 US cents, 61.02 British pence, 86.4 Japanese yen, 71.56 eurocents, $NZ1.0606
  • US: S&P 500 +0.60pc to 2,308, Dow Jones +0.59pc to 20,172, Nasdaq +0.61pc to 5,716
  • Europe: Euro Stoxx +0.96pc to 351.34, FTSE +0.57pc to 7,229, DAX +0.86pc to 11,642
  • Commodities: Gold -0.88pc to $US1,230.70/ounce, Brent crude oil +0.96 pc $US55.65

In a meeting with airline executives, Mr Trump described lowering the overall tax burden on US business as "big league".

NAB economist Tapas Strickland wrote in a note that the remarks gave markets hope Mr Trump would at last provide long-awaited details on his fiscal plans, including tax cuts and infrastructure spending.

But he cautioned the impact of Mr Trump's policies posed risks.

"While markets are rallying on prospects of tax cuts, there still remains the danger of growing protectionism which Mr Trump also implied when he noted 'a lot of that [airline] competition is subsidised by the governments, big league'," Mr Strickland wrote.

"Further elucidation of Mr Trump's policies - both stimulatory and protectionist ones - is also a key for the Federal Reserve.

"The St Louis Fed President James Bullard (a non-voter) was out overnight playing down the prospects of a March rate hike, noting that fiscal uncertainties are unlikely to get meaningfully resolved by March and that conditions for much higher inflation are not materialising.

"Mr Bullard also made some comments on the Fed's balance sheet, arguing for a 'more natural normalisation process', whereby the Fed would stop the reinvestment of maturing bonds alongside the gradual rate hikes that are expected.

"By doing so, that would allow the whole yield curve to adjust."

In economic news, the number of Americans filing first-time claims for jobless benefits fell by a seasonally-adjusted 12,000 last week to a near 43-year low of 234,000.

Claims have remained below 300,000, which is the threshold linked to a robust employment market, for 101 consecutive weeks.

That represents the longest stretch since 1970, when the US labour market was substantially smaller.

In corporate news, Coca-Cola lost value after predicting a fall in its full-year adjusted profit.

Twitter tumbled about 11 per cent after the social media giant reported lower advertising revenue in the latest quarter.

European markets closed at their highest level in a fortnight, with some solid profit results driving the gains.

The local market is on track for a solid rise at the open, with the ASX SPI 200 up 0.4 per cent to 5,634 at 8.15am (AEDT).

At the same time, the Australian dollar was worth $US76.3 US cents, having eased overnight.

West Texas Crude oil was higher at $US52.94 a barrel, the price of a barrel of Tapis was lower at $US56.07 and spot gold had fallen to $US1,230.70 an ounce.

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