Futures gain as tax cut hopes outshine trade war fears

September 10, 2018

By Shreyashi Sanyal

(Reuters) – U.S. stock index futures were higher on Monday as hopes for a new round of tax cuts overshadowed anxiety over trade after U.S. President Donald Trump raised the stakes in the Sino-U.S. trade dispute on Friday.

Republicans in the U.S. House of Representatives plan to unveil a fresh round of tax cuts this week, hoping to draw a sharp contrast between themselves and Democrats ahead of the Nov. 6 congressional elections.

Dubbed “Tax Reform 2.0”, the package is intended to augment Trump’s 2017 tax overhaul, which added $1.5 trillion to the federal deficit through permanent tax cuts for U.S. companies.

“There is definitely a sense that Congress is going to get these tax cuts implemented before the end of this month and the positivity around that could be pushing the markets higher,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

“We will be seeing a relatively strong opening today because the markets are due for a rebound given the negative string we had last week.”

A majority of the Dow Jones Industrial Average <.DJI> and S&P 500 <.SPX> components trading premarket were in positive territory. They included the usually trade-sensitive Boeing <BA.N>, whose shares were up 0.42 percent in premarket trading, and Caterpillar <CAT.N>, which was up 0.20 percent.

At 7:57 a.m. ET, Dow e-minis <1YMc1> were up 90 points, or 0.35 percent. S&P 500 e-minis <ESc1> were up 10.25 points, or 0.36 percent and Nasdaq 100 e-minis <NQc1> were up 39.25 points, or 0.53 percent.

While U.S. markets were poised for an upbeat session, world shares were flirting with their longest run of declines since early 2016, hit by rising anxiety about the U.S.-China trade war.

On Friday, Trump said he was ready to levy additional taxes on practically all Chinese imports, threatening duties on $267 billion of goods over and above planned tariffs on $200 billion of Chinese products. China said it will respond if the United States takes any new steps on trade.

Shares of Apple <AAPL.O> were up 0.5 percent. The stock had dropped on Friday after the company said a “wide range” of products would be hit by the proposed tariffs, although it did not mention the iPhone.

Intel <INTC.O> was up 0.32 percent. Its stock also fell Friday after the chipmaker said tariffs could slow down the adoption of 5G networks and hit companies that make desktop computers and laptops.

Tesla <TSLA.O> rose 3.1 percent after brokerage Baird named the electric carmaker’s stock its “fresh pick”, citing strong fundamentals could drive shares higher ahead of the company’s quarterly earnings.

Alibaba <BABA.N> fell 1.3 percent after the company said Jack Ma will step down as chairman in one year, passing on the reins to trusted lieutenant, Chief Executive Officer Daniel Zhang.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta)

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September 10, 2018 at 05:45PM
from One America News Network