The ASX Today

The ASX is indicating it will open higher on the release of the US tax reform blueprint overnight and Trumponomics coming back in favour.

ASX SPI 200 Futures traders have added 21 points to the index early this morning. 

AxiTrader chief market strategist, Greg McKenna, described last night's moves as “a big deal”.

“That makes the US the focal point again. And it changes the narrative in financial markets,” said McKenna.

He believes if the ASX is going to break its steep downtrend, today will be the day. Banks and tech stocks fared the best in the US, which should support the local financial sector's improving outlook. Financials have been solid performers this week on the ASX, with the sector the second-best performer to the energy sector.  

KEY POINTS

• US President Donald Trump's tax reform blueprint is released, with a positive reception
• Analysts count on this being the day the ASX breaks its downtrend
• Local financial sector should continue moving into the black
• The Australian dollar is sidelined in a US dollar story and back at US78.5c
• August job vacancies data released today in Australia
• Dividends paid today: Wesfarmers, Telstra, Ramsay Health, Amcor, Healthscope, Medibank, St Barbara
• Several REITs and listed property trusts start trading ex-dividend — expect pressure on the sector

Two big ticket items in Trump's tax reform blueprint were a reduction in the corporate tax rate from 35 per cent to 20 per cent, and a reduction in the top individual tax rate from 39.6 per cent to 35 per cent, but the income level hasn't yet been specified. There's also a potentially higher rate on the cards for very high income earners. 

The tech-tilted Nasdaq was most heavily impacted overnight, rising 1.15 per cent. Gains in the S&P 500 and the Dow were a little more tempered, but the indices still rose 0.4 per cent and 0.25 per cent respectively. 

“The US dollar has been weak and US long bonds relatively low because US data was weak and traders were betting the Fed wouldn't follow up on its forecast rate rises,” explained McKenna in a morning note.

“But in the space of two days we've now had confirmation Janet Yellen is going to keep hiking rates and President Trump's ‘Gang of 6' have delivered a tax plan that might get through.”

Oil is looking muddled this morning. WTI is up 0.35 per cent to $US52.06, while Brent crude has slipped 1.28 per cent to $US57.69.

Gold was sold off overnight on reduced geopolitical tensions and what appears to be an improving US outlook, with the proviso the tax reform blueprint can get through Congress. The precious metal dropped $9, or 0.72 per cent, and this morning is $US1294 an ounce.