Asian Shares Rise Ahead Of U.S. Tax Plan; Dollar Near One-Month High

Shares rose on Wednesday as investors hoped for progress on major tax reform in the United States, while the dollar hovered near one-month highs on growing expectations of a U.S. interest rate increase in December.

European stock futures and Dax futures climbed 0.3 percent each while FTSE futures gained 0.2 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.1 percent, after falling for four straight days to a three-week trough.

The Trump administration and Republicans in Congress are due to outline a tax plan on Wednesday. If passed, it would be the first significant legislative victory for U.S. President Donald Trump since taking office in January.

It would also be a win for Wall Street as corporate tax cuts would potentially boost company profits, while a tax amnesty on offshore cash holdings could fuel share values as well as demand for the dollar.

“We’re now seeing some embryonic prospects of a tax reform in the United States which is a much bigger issue for the markets than the Federal Reserve,” said Ray Attrill, Sydney-based global head of forex strategy at National Australia Bank.

“Our view has been the market had moved from applying a Trump premium from November-December to applying Trump discount due to his inability to pass any major reforms. A meaningful tax reform could serve to reduce some of that discount.”

Analysts said the U.S. tech space will be one to watch as it has mountains of cash that could be repatriated for share buybacks and dividends.

Wall Street ended mostly flat on Tuesday, but the tech sector gained 0.4 percent, with Apple shares rising 1.7 percent after four sessions of declines.

China’s CSI 300 index rose 0.3 percent on Wednesday, while Japan’s Nikkei was off 0.3 percent, with some stocks trading ex-dividend.

Courtesy : .Reuters