Markets Disappointed by Tax Plan
The release of the Senate version of the Republican tax plan overnight appears to have disappointed stock markets with both the S&P 500 and Dow Jones selling off although a rally in the second half of the trading day brought them back to a 0.4% loss after being down around 1% earlier on. The ASX had a good day yesterday with the ASX 200 reaching 6,050 which represents post-GFC market highs although futures are pointing to a lower open this morning.
Oil prices have risen again and WTI oil has broken back above $57 per barrel. Concerns of instability in Saudi Arabia appear to be supporting prices together with the fact that inventory changes over recent months indicates that the supply/demand imbalance has improved. The main question for the oil market is whether OPEC will agree to an extension of its production cuts which are due to expire next March. The market is hoping they will agree to an extension that would see the cuts continue until the end of next year.
Today the RBA Monetary Policy Statement will be released which is a quarterly update that gives an idea of the bank's view on economic growth and inflation. Based on the statement from Tuesday's policy meeting, the bank sees GDP growth averaging around 3% per annum although interest rates are unlikely to be hiked until later in 2018. The statement to be released today should provide a more comprehensive view on the economy.
Gold prices have been gradually gaining ground over the last few days and the release of the watered down tax plan overnight appeared to further support the price. Weakness in the Aussie dollar has helped push the Aussie dollar price of gold to a two-month high.
– Australia Monetary Policy Statement 11:30am AEDT
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This article was written by William O'Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via email@example.com or by phoning +612 8302 3633.