Latest Market Summary
SENATE APPROVES US TAX BILL
The US Senate passed the historic Tax Bill proposed by the Republicans on Saturday, leading biggest tax overhaul in the last 30 years. The bill had the support of most of the Republicans barring. The bill included about USD 1.4 trillion in tax cuts, corporate taxes were lowered to 20% from 35% and temporarily lowered
individual taxes. The bill will need to be merged with the one passed in the House of Representatives before it is signed into law, this if accomplished will mark one of the greatest legislative victory for President Trump and his fellow Republicans.
EQUITIES & DOLLAR FALL AMID RISING POLITICAL RISK IN US
The S&P fell by 1% and the Dow Jones shed 350 points in the early hours of Friday following reports of the new development in the Russia probe. However, in the later hours of the day, the indices recovered on the news that the Republicans had enough votes to pass the tax bill in the Senate, both the indices finished the
day at -0.2% each. The dollar index which is a measure of the dollar against a basket of 16 currencies reacted similarly to these developments and ended the day down at -0.4%.
OIL PRICES SURGE AFTER OPEC DECISION OVER OUTPUT
Oil prices rose on Friday after the OPEC and other major oil-producing states agreed on limiting their output for a period of nine months. US Crude rose 96 cents or 1.67%, the Brent rose $ 1.10 or 1.76% a barrel. The output extension was anticipated, the market’s reaction, however, was lukewarm compared with a year ago when announcements of initial cuts pushed the prices up by 9%. Nevertheless, an increase in production in US Shale producers do pose a threat to the recent OPEC efforts.
US GOVT BONDS PRICES RISE ON TAX BILL REPORTS
Govt Bond prices rose on early Friday after yields declined after signs of stall in Republican tax bill, the bond prices later stabilise after reports that the tax bill was set to pass in the Senate. Yields declined further after reports of former national security adviser Michael Flynn cooperating with the ongoing investigation into the alleged links between Russian and the Trump campaign.
FED RATE HIKES LIKEY IN THE LIGHT OF US TAX REFORM
The likelihood of a rate increase this month has been strengthened by the recent passage of the tax bill in the Senate. Experts believe that there was no need for fiscal stimulus when the US Economy was already expanding, and unemployment rates were at a low level of 4.1%. A fiscal stimulus is likely to overheat an expanding economy as experts believe that with unemployment at a lower rate it will increase inflation hence increasing the prospect of a rate cut.
IN OTHER FINANCIAL NEWS :
- Brexit deal on irish border close,The negotiations on the Anglo-Irish border standoff seems to be coming to a logical conclusion according to the sources privy to the ongoing talks. The Irish are demanding a soft border between the Republic and the Northern Ireland.
- China tries to rein in its micro-finance sector,The Chinese authorities are taking a more stringent approach towards its small online consumer lender, with new rules and guidelines being outlined to curb the lax and sloppy practices currently prevalent in the sector.
- US opposes China’s market status,US has recently submitted a document to World Trade Organization opposing China’s market economy bid at the WTO. A market economy status will aid China in its disputes with US and other countries over anti-dumping rulings against Chinese companies.
- Indian GDP regains strength,The Indian GBP grew by 6.3% in Q3 2017, this followed several quarters of demonetization led slowdown in the economy.