Futures gain as tax cut hopes outshine trade war fears
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[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
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.
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Traders work on the floor of the New York Stock Exchange (NYSE) in
New York, U.S., September 7, 2018. REUTERS/Brendan McDermid
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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