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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden (now) and Nick Fletcher

Trump unveils 'most significant tax reforms since 1986', but experts sceptical --as it happened

A live feed of today’s tax reform briefing, with Secretary of the Treasury Steven Mnuchin and National Economic Director Gary Cohn

That’s all from us; thanks for reading and commenting! GW

Steven Mnuchin’s claim that faster economic growth would help fund these tax cuts (see here) has been rubbished by one former White House staffer.

CNBC explains:

“This idea that growth can pay for these kinds of huge tax cuts is operating in fairyland,” former Clinton administration budget director Leon Panetta told MSNBC on Wednesday.

“That just doesn’t work, so if you’re going to do a tax cut, then show how you’re paying for it.”

U.S. National Economic Director Gary Cohn (left) and Treasury Secretary Steven Mnuchin unveil the Trump administration’s tax reform proposal.
U.S. National Economic Director Gary Cohn (left) and Treasury Secretary Steven Mnuchin unveil the Trump administration’s tax reform proposal. Photograph: Kevin Lamarque/Reuters

Here’s our US business editor Dominic Rushe on today’s tax announcement (with links to the key points in this liveblog)

Trump’s ‘huge tax cut for the rich’ would slash taxes for businesses and wealthy

The Trump administration unveiled what it called the biggest tax cuts “in history” on Wednesday in a move that will simplify the US tax system, slash taxes for businesses large and small (including his own), eliminate inheritance taxes and set the president on a collision course with Congress over the likely $2tn-plus cost of the proposal.

Critics immediately called it “basically a huge tax cut for the rich”.

The plan would cut the US’s individual income tax brackets from seven to three (10%, 25% and 35%) and slash US corporate tax rates from 35% to 15%.

“We have a once in a generation opportunity to do something really big,” said Gary Cohn, chief economic adviser to Donald Trump.

“This is about growing the economy, creating jobs.”

Cohn and Steven Mnuchin, the treasury secretary, were short on details of the plan that, if passed, would be the largest overhaul of the US tax system since the Reagan era. “We are moving as quickly as we can,” said Mnuchin.

The announcement comes amid a continuing row over Trump’s own taxes, with members of his own party asking for him to release his returns before pressing ahead with tax reforms. Mnuchin said on Wednesday that Trump “has no intention” of releasing his tax returns to the public.

As well as slashing costs for his own businesses, the new proposals will also cut the alternative minimum tax (AMT), a tax designed to stop the super-wealthy from taking so many tax deductions that they avoid paying anything. Leaked documents have shown that in 2005 Trump paid $31m in tax thanks to the AMT.

Mnuchin and Cohn were pressed on how Trump would benefit from the proposals but avoided the questions. “What this is about is creating job and economic growth,” Mnuchin said. Mnuchin described the proposals as “the biggest tax cut and the largest tax reform in the history of our country”....

Here’s Dom’s full story:

FILE - This Monday, July 6, 2015, file photo shows a sign for Wall Street carved into the side of a building in New York.

The US stock market has greeted the plan with a shrug.

The Dow Jones industrial average is up just 37 points, or 0.2%, with similar small gains on the S&P 500 and the Nasdaq.

That’s because some of the details had already leaked, so were ‘priced in’, and also because it’s not clear that the plan can really be implemented.

Neil Wilson of ETX Capital says:

Stocks pared gains, sliding as the ‘details’ were announced, while the dollar also handed back gains.

For all the hype, this just wasn’t quite enough to send everything skyward....

We have to factor in considerable risk that the president won’t get his way on tax and must be sceptical about whether the package will make it through the legislature in its current guise.

Economics professor Justin Wolfers is also sceptical that this plan can get approved.

That’s because it doesn’t appear to pay for itself or appeal to Democrats on Capitol Hill.

Capital Economics: Congress won't like it

Analysts at Capital Economics are sceptical that the House and the Senate will approve this plan:

The “new” tax plan that the White House unveiled today looks a lot like President Donald Trump’s old economic plan from the election campaign, with deep cuts to corporate and individual tax rates.

Even with dynamic scoring, however, the old plan was expected to increase the Federal budget deficit by $7trn over the next decade. For that reason alone, this plan is never getting approved by Congress, particularly not through a budget reconciliation that requires ten-year revenue neutrality.

That tax reform plan in full

Donald Trump’s historic tax reform plan actually fits on a single sheet of paper, with just a dozen key bullet points:

Instant reaction

Here’s a video clip of Steven Mnuchin being quizzed about Donald Trump’s elusive tax returns:

Q: Analysis of Donald Trump’s tax returns from 2005 show that without the Alternative Minimum Tax (AMT) he would have only paid £5.3m of tax..

So doesn’t that show that these tax reforms will benefit the president and his companies?

This plan is about “creating jobs and creating economic growth”, Mnuchin insists. We’re talking about massive tax cuts, massive tax reforms, simplifying the system.

The AMT is just a “third complicated set of rules”, he insists [explainer: AMT is a supplementary income tax aimed at preventing the richest people avoiding tax]

And that’s the end of the session -- Spicer, Cohn and Mnuchin exit smartly, as a reporter shouts whether Trump might yet change his mind about releasing his tax returns.

Steven Mnuchin
Steven Mnuchin Photograph: White House

Q: Will these plans mean president Trump pays more or less tax?

I can’t comment on the president’s tax situation since I don’t have access to that, Mnuchin smiles.

Our objective is the reduction in taxes is offset by significant reductionin deductions and other items.

So the effective tax rate is what we’re focused on, he adds.

Q: What does this proposal mean for American families watching from home?

It means a tax cut, national economics director Gary Cohn promises.
Q: How much?

We’ll let you know as soon as the final details are agreed, Cohn promises.

Mnuchin: Trump won't release tax returns

The elephant in the room rears its trunk...

Q: Will the president release his tax returns?

Trump has “no intention” of releasing his tax returns, Mnuchin replies.

He’s released “plenty of information....I think the US population has plenty of information.”

Q: This is just one page - just a statement of principles. When do we see full details?

We’re working as fast as we can, Mnuchin replies.

Q: When would the Death Tax be repealed?

Our initial proposal is to phase it out immediately, as son as this new tax package is passed into law, Cohn replies.

Updated

Q: Is there a danger that Republicans won’t support this package, as with Trump’s healthcare reforms?

There is a lot of desire from everyone to reform the tax system, Mnuchin replies.

We have agreement on the core principles of this package.

Q: Will this package pay for itself?

We’re working on the details, says Mnuchin, before promising:

This will pay for itself with extra growth, and by reducing tax deductions and closing loopholes.

Gary Cohn also wades in, declaring that the plan will cut debt as a percentage of GDP. In other words, the economy would grow faster than the national debt.

Q: You talked about repealing the 3.8% Obamacare rate that hits small businesses - is this the first attempt to start pulling Obamacare back?

We are trying to get rid of that tax so we can get more capital back into the economy and stimulate business investment, says Cohn.

Q: What do you say to critics who say this package is about helping corporations, not reforming the tax code?

This package is about growing the economy and creating jobs, Cohn replies.

Updated

Asked for more details about the plans, Cohn says the administration is still working with the House and the Senate to agree final details.

The goal is to simplify the tax system, lower rates, and make the system fairer, he adds.

Q: What are the income boundaries for the new 10%, 25% and 35% tax brackets?

Cohn won’t say - only that there is a ‘broad brush’ view of where they’ll be.

We’ll be back to you with very firm details, he promises.

Updated

Now Treasury secretary Steven Mnuchin speaks, confirming that the US corporation tax rate will fall to 15%.

Small and medium-sized firms will benefit, he pledges, not just big business.

Mnuchin also confirms a tax repatriation holiday for businesses who have got cash piles stacked overseas, but doesn’t give details.

Cohn predicts that the Trump administration will be attacked from both sides, but he wouldn’t bet against the president getting this plan through.

As rumoured, the plan cuts the number of tax brackets to three, from seven.

We will repeal the Death Tax on American’s estates, says Cohn -- something West Wing fans will be familiar with.

Trump is creating a new zero-rate tax band, Cohn says, that means married couples won’t pay tax on the first $24,000 they earn.

Cohn outlines how complicated the US tax code has become - it now comes with 211 pages of instructions.

Americans spend 7 billion hours complying with tax codes each year, he declares - and almost everyone needs some help filling the form in.

Cohn: This is the most significant tax reform since 1986

Gary Cohn speaks first.

This is a historic day, he says - a once in a generation opportunity.

The president is going to lead the most significant tax reform legislation sine 1986, and one of the biggest tax cuts in history.

Many of the key principles have already been agreed with Congress, Cohn continues, and the administration will work hard over the next few weeks to get a full agreement.

Tax reform is ‘long overdue’, he continues - both for business and families, especially low and middle-income ones.

The session is underway - press secretary Sean Spicer jokes that he didn’t expect such a big audience for an announcement about the Antiquities Act (tee hee....)

Watch the briefing live here

I think this live feed should let you watch Mnuchin and Cohn in action....

Live feed.

Some Republicans are already concerned that Trump’s plan is all about tax cuts, and not really about reforms at all.

CNN has the details:

House Speaker Paul Ryan put a positive spin on things during his own news conference Wednesday, but things are far from great behind the scenes. The Trump administration has ruffled GOP feathers on Capitol Hill, by getting in the way of legislators efforts to fix the tax system.

“It’s not tax reform,” said one senior GOP aide. “Not even close.”

We’re expecting to hear details of the tax reform plan very shortly....

While we wait to hear from Steven Mnuchin (and Gary Cohn) here’s a video clip of him speaking earlier today:

CNBC’s Eamon Javers has heard that Trump’s plan might eliminate some tax exemptions (which allow people to lower their overall bill)

European shares edge higher

It was not a convincing display, but this week’s market rally which began with Emmanuel Macron’s victory in the first round of the French election and was then fuelled by the prospect of Donald Trump’s tax cuts, has continued for another day. Ahead of the confirmation of the US president’s plans European markets ended higher, helped by a positive morning on Wall Street. There was still some caution in Europe, as investors awaited Thursday’s meeting of the European Central Bank, which will be carefully scrutinised for any hints that the bank might begin withdrawing its economic stimulus measures. The final scores showed:

  • The FTSE 100 finished up 13.08 points or 0.18% at 7288.72
  • Germany’s Dax edged up 0.05% at 12,472.80
  • France’s Cac closed 0.19% higher at 5287.88
  • Italy’s FTSE MIB rose 0.15% to 20,836.51
  • But Spain’s Ibex ended down 0.18% at 10,763.4
  • In Greece, the Athens market added 1.3% to 706.40

On Wall Street, the Dow Jones Industrial Average is currently 56 points or 0.27% higher.

Updated

Not everyone is upbeat about Trump’s corporation tax reform. ActionAid head of policy Anna Thomas said:

President Trump’s plan to slash the corporate tax rate risks triggering a global race to the bottom, which could see companies paying minimal taxes around the world. Despite public outrage at corporate tax scandals involving the likes of Google and Amazon, big companies look set to benefit from historically low rates.

The IMF has found that when countries try to undercut each other on tax, poorer countries suffer the most. They are particularly dependent on corporation tax and stand to lose the most as they come under pressure to offer ever-lower tax rates to big companies. Healthcare, schools and other key public services are left starved of resources as they are deprived of tax revenues, hitting women and girls hardest.

There are reported details of further US tax reforms, in addition to the cut to corporation tax. Individual tax bands of 10%, 25% and 35% are being proposed, apparently:

Here’s a comparison of various countries’ corporate tax rates:

'Trump trade back in play'

US markets have come to life ahead of the Trump tax announcement.

The Dow Jones Industrial Average is now up 67 points and is just 100 points shy of its record high of 21,169 hit on 1 March this year. If the market likes what it hears from Trump’s administration, that barrier could soon be breached.

Meanwhile Nasdaq, which did hit a record high on Tuesday, has edged higher, with many of its technology constituents likely to benefit from the tax changes. Joshua Mahony, market analyst at IG, said:

Global markets have continued in a buoyant mood today, thanks to optimism about the impending tax reforms in the US. Despite a significant degree of political uncertainty still evident in Europe, there is a feeling that worst is over, with markets instead focusing on the Trump trade coming back into play.

Unlike other more nuanced political and economic changes, a huge corporate tax cut would make a huge difference to the bottom line of US-based businesses. For investors, this impending shift in profitability is a huge attraction to invest in the US, and hence the outperformance of the American markets relative to Europe.

Over in Greece, as long-stalled bailout negotiations finally resume, prime minister Alexis Tsipras has been causing ripples warning that while parliament may legislate creditor-demanded reforms, the painful measures may never be implemented if the country isn’t given debt relief. From Athens our correspondent Helena Smith reports:

With the timing of a maestro, Greece’s leftist leader used the first day of reactivated bailout talks to deliver a stern message: without promised debt relief the pension cuts and tax hikes Athens has now agreed to as part of a bigger package to unlock further emergency loans will never be enforced.

In a live TV interview aired late Tuesday, Tsipras said it was Greece’s right as “as sovereign government” to reverse the measures (the equivalent of 2 % of GDP and due to be enacted as of 1.1.2019) if lenders didn’t also honour pledges to offer medium-term debt relief that would allow the economy to breathe.

“They will not be implemented if we do not have a solution to the debt,” he told ANT 1 TV. While the controversial cuts worth €3.6bn would be approved by parliament in the coming weeks, Tsipras insisted it was within Greece’s sovereign right “to take back something that had been voted if the agreement wasn’t upheld.”

Tsipras
Tsipras Photograph: Pierre-Philippe Marcou/AFP/Getty Images

Predicting that the progress review would be completed in time for the next eurogroup on May 22 – averting the prospect of crisis being replayed when Greece is called to meet €7.5bn of maturing debt in July – Tsipras argued that the review was no ordinary report card but part of a much broader agreement that would allow the country to finally recover from eight years of crisis.

While Athens had been forced to make concessions, it had also won the ability to enforce “counter measures” to offset losses when Greece hit budget targets and secured valuable labour rights that the IMF had wanted to abolish. “We must not see this review as a review that only concerns the bailout programme. It is the most critical review. Why? Because we have a comprehensive agreement,” he said in the interview.

Oil recovers after crude stocks fall by more than expected

Unlike the American Petroleum Institute figures out on Tuesday, the latest official figures on crude stocks show a surprise fall in inventories.

The API said stocks rose last week by 897,000 barrels but figures from the Energy Information Administration show a weekly fall of 3.64m barrels to 528.7m. This is higher than the forecast fall of 1.7m barrels.

Gasoline stocks however rose by 3.37m barrels compared to expectations of a 1m barrel fall.

Brent crude, which had earlier fallen as low as $51.38 a barrel is now up 0.19% at $52.2.

The API report is an industry one while the EIA is a government publication. Here is more on the two reports, which are often aligned but sometimes contradict each other.

Updated

Investors are awaiting more details on the Trump tax plan, hence the muted reaction in the markets so far, says Connor Campbell, financial analyst at Spreadex:

Financial Analyst Treasury Secretary Steve Mnuchin’s confirmation that Donald Trump is seeking to cut corporation tax to just 15% did little for the markets this afternoon.

Mnuchin echoed the President in an interview on CNBC, promising the ‘biggest tax cut’ and ‘largest tax reform in US history’. Yet this hyperbole was treated as just that by the Dow Jones, which nudged a mere 0.1% higher after the bell. Even the dollar was nonplussed, maintaining 0.3% and 0.5% rises against the euro and Japanese yen respectively while sitting flat against sterling.

The fact investors failed to react to the Treasury Sec’s headline tax cut announcement suggests that they are looking for more detail, especially the red flags that may cause any proposed bill to go the same way as Trump’s healthcare reforms. There is also every chance that the bulk of the tax plan’s market-boosting juice was used up yesterday, leaving little room for extra growth following the Mnuchin/Cohn press conference later this evening.

Elsewhere oil prices are slipping back ahead of new official US crude inventory data from the Energy Information Administration.

Earlier in the week industry figures from the American Petroleum Institute showed crude stockpiles rose by 897,000 barrels last week, compared to expectations of a 1.7m fall. The report indicated the difficulty producers are having in reducing supplies despite cuts in output, which have been offset by growing production from US shale companies.

Brent crude is currently down nearly 1% at $51.60 a barrel while West Texas Intermediate - the US benchmark - has dipped 0.8% to $49.16.

Updated

Wall Street edges higher at open

Confirmation of at least one part of Donald Trump’s US tax proposals - corporation tax cut to 15% - has done little for US markets, but at least they have opened higher rather than lower as originally expected.

The Dow Jones Industrial Average is up nearly 7 points while the S&P 500 is virtually flat and Nasdaq Composite is 1.45 points better.

US markets
US markets Photograph: Marketwatch

Here’s our first take on the proposed US tax reforms, with a corporation tax to 15% now confirmed by Treasury secretary Mnuchin:

Here’s more details of the Mnuchin interview, and some early reaction:

CNBC: Treasury's Mnuchin promises 'biggest tax cut' in US history

Nice work by The Hill and CNBC there, getting early confirmation from the Treasury secretary about Trump’s tax reform plans.

Here’s CNBC’s early take:

Treasury Secretary Steven Mnuchin confirmed that the tax plan the Trump administration will outline Wednesday afternoon will call for a 15% corporate rate.

At an event hosted by The Hill, Mnuchin — who declined to go into many specifics about the proposal — contended it would be “the biggest tax cut and the largest tax reform in the history of our country.”

Mnuchin and White House chief economic advisor Gary Cohn are expected to go into more detail about the plan at a briefing later in the day.

When Trump floated a 15 % corporate tax rate as a candidate, most analyses of the proposal estimated that it would balloon the deficit. It is unclear what the proposal would do to raise revenue to offset those major cuts, and Mnuchin declined to say how specifically the administration would pay for the 15% rate.

Updated

Asked about the US debt ceiling, Steven Mnuchin says an agreement must be done in the fall (that’s the autumn, UK readers) to create headroom for more borrowing.

He doesn’t want to get into the details of any potential deal, though.

On the US economy, Mnuchin says he’s confident that 3% per-year growth can be achieved [up from just 1.6% last year].

Updated

Treasury secretary Mnuchin: We've cutting business tax to 15%

Steven Mnuchin today
Steven Mnuchin today Photograph: CNBC

Newsflash: America’s treasury secretary has just confirmed that Donald Trump wants to cut business taxes to just 15%.

Speaking to CNBC ahead of today’s official announcement, Steven Mnuchin says:

I can confirm that the business tax rate will be 15%.

This will deliver on Trump’s campaign pledge to cut corporation tax, and stimulate growth and job creation, the Treasury secretary explains.

The aim is to cut the taxes paid by small businesses, Mnuchin continues, rather than create a loophope for the rich.

Mnuchin adds that the Trump administration want to simplify the US tax code.

We have a fundamental agreement with Congress about tax reforms, Mnuchin explains, but the details need to be worked out.

The interview is being streamed live here.

Updated

Today’s Wall Street open will be more whimper than bang, with the Dow expected to open broadly unchanged.

The pound has taken the opportunity to claw back a little ground against the euro today, up 0.2% to €1.178.

Chris Saint, senior analyst at Hargreaves Lansdown, says:

Sterling has bounced off a two-week low of €1.1718 versus the euro to trade around half a cent higher at €1.1771 by noon, although euro strength is generally still being underpinned by ongoing expectations that Emmanuel Macron will defeat Eurosceptic candidate Marine Le Pen in the second round of the French presidential elections on 7 May.

Twitter beats forecasts! But revenues have fallen

The logo of social network site Twitter.

Social networking site Twitter has defied its critics and posted better than expected financial result.

Shares in Twitter are soaring in pre-market trading after it reported earnings of 11 cents per share (on a non-GAAP basis) up from the 1 cent per share which Wall Street expected.

Twitter also signed up an extra 9 million users in the last quarter, and now has 6% more users than a year ago.

But despite that, Twitter’s revenues declined in the quarter to $548 million, down 8% on a year ago.

“We’re proud to report accelerating growth in daily active usage for the fourth consecutive quarter, up 14% year-over-year,” said

Jack Dorsey, Twitter’s CEO, warns that Twitter continues to face “revenue headwinds”, but believes it will return to positive revenue growth in the long term.

Traders are optimistic; Twitter shares have surged by 11% in the New York grey market.

Updated

Former UK prime minister David Cameron apparently told friends recently it was time to “put some hay in the barn”, after swapping Downing Street for the speaking circuit.

By that measure, Barack Obama may need a second barn - after agreeing to give a speech to Cantor Fitzgerald for $400,000....

Sports Direct agency Transline prepares for insolvency

Newsflash: One of the employment agencies at the centre of the workplace problems at Sports Direct is preparing for insolvency.

My colleague Simon Goodley explains:

Transline, the temporary employment agency that became embroiled in the Sports Direct scandal, has submitted court documents preparing the company for insolvency.

The Guardian understands that the business has filed a “notice of intention of appointing administrators” at a court in Leeds, and has sounded out the accountancy firm Deloitte as a potential administrator.

The “notice of intention to appointment” is a device to give notice to secured creditors that there is a chance or prospect of an administration process. It also creates a moratorium around the business from action by creditors for 10 working days.

Transline hit the headlines last year, over its ‘six strikes’ policy that penalised workers for trivial actions like ‘excessive talking’ or taking time off to nurse an ill child.

It has also been facing backpay claims from Sports Direct staff who received less than the minimum wage, due to security checks.

Here’s the full story:

It’s been one of those mornings...

Croda shares hit record high after weak pound boost

It’s been a good morning for Yorkshire-based chemicals company Croda.

Shares in the FTSE-listed firm hit a record high this morning, up 4.8%, after it reported a blistering 19% jump in revenues in the last quarter.

It confirms that UK companies are benefitting from the fall in sterling since the EU referendum (Croda’s sales were only up 5% in ‘constant currency’ terms).

Croda aren’t exactly a household name, but its chemicals go into a swathe of products - from beauty products and Omega 3 fish oil to paints and adhesives.

WSJ: Traders may be getting early peek at UK data

Is some UK economic data being leaked early, and is someone profiting from it?

The Wall Street Journal has examined how the pound performs around major data releases, and found that it typically starts to move before the news hits the wires. That’s fuelling concerns that some people may be illicitly profiting from embargoed information.

The WSJ’s Mike Bird explains:

During the hour before unexpectedly strong or weak U.K. data is made public, the pound moved 0.065% versus the dollar on average in the same direction it subsequently did after those numbers came out, according to an analysis prepared for The Wall Street Journal by Alexander Kurov, associate professor of finance at West Virginia University.

It showed that the average change in the pound’s value one hour before and after such economic data announcements is 0.127%, meaning around half the shift associated with the statistics came ahead of their official release

This is significant because UK data is shared with a wide number of government insiders (from ministers to press officers) before it is released.

This creates the potential for a leak -- unlike in Sweden, say, where no-one outside the statistics office gets a sniff before the official release. And the Swedish krona is much less likely to pre-empt a data announcement:

Comparison of the pound vs the krona at data time.

More here:

Are U.K. Traders Getting an Early Glimpse at Government Data? Currency Markets Suggest Yes

Updated

Trump's tax reforms: The key questions

President Trump.

Kathleen Brooks of City Index has released a very useful note outlining the Trump tax proposals, and the likely political hurdles.

Here’s a flavour:

Will Congress back Trump this time?

In theory this tax plan looks like it should extend the rally for US stocks. If taxes are slashed then some large US firms may re-base themselves back in the US to take advantage of the 15% rate, which might encourage them to engage in shareholder-friendly activities such as share buy-backs, larger dividends etc.

However, stocks may pause on Wednesday as the market waits for the reaction from Congress who actually has to pass the bill.

The pesky debt ceiling remains crucial problem for Congress

The problem for the Republican -controlled Congress is the debt ceiling, which was breached back in March but has been massaged by some accounting measures until the end of this month. Congress is trying to pass a budget that will fund the Federal Government from 28th April, however, an unfunded tax cut from the Trump administration could add to the pressure on the debt ceiling going forward.

Thus, Republicans have to balance their desire to reduce the Budget deficit, with their desire to boost the economy with a large cut to the corporate tax rate. If they do the latter, as many expect, then this could be a green light for US stock markets.

Infrastructure plan, what infrastructure plan?

This makes Trump’s infrastructure plan, which has been suspiciously absent from the coverage of the tax blueprint, very unlikely to go ahead. The Trump team is likely to focus on the fact a tax cut can pay for itself and create jobs, but can it do that at the same pace of a large government-spending programme?

On balance, we expect markets to outperform in the coming days if key members of Congress throw their weight behind Trump’s tax proposals. But, if there are any signs that this won’t get through the US legislature, then we could see big declines for US stocks.

European stock markets will probably have closed before we hear details of Trump’s tax proposals.

According to The Hill, an announcement is expected at 1.30pm Washington time, or 6.30pm BST.

They also predict that Secretary of the Treasury Steven Mnuchin and National Economic Director Gary Cohn will present the plans; Trump is busy holding a session on North Korea, with Secretary of State Rex Tillerson.

Updated

After two solid days, European stock markets are taking a little breather.

The UK, French and German indices have all dipped in early trading:

European stock markets tis morning

Donald Trump’s tax reforms plans are the number one issue in the City today, says Naeem Aslam of Think Markets.

He sounds a little sceptical about the whole thing, though:

Currently, one major aspect of his plan which everyone is talking about is the corporate rate tax cut to 15% from its current rate of 35%. He can certainly cut that to 15% but that would only be good enough to produce a mammoth headline on the newswire.

But, the question which you need to ask is how long it will take for that tax rate to become effective if it becomes effective at all. The market may go higher on the back of these flashy headlines but it will not take long before reality catches up with it.

Last weekend’s French elections continues to reassure traders, says Chris Weston of IG:

It’s a good time to hold equity and credit and it seems a dark cloud in the form of the French elections has swiftly departed from the investment landscape, combining effectively with headlines on Trump tax reform and in turn providing fresh impetus to chase returns.

The prospect of sweeping tax reforms in America has helped to drive Asian stock markets higher today.

Japan’s Nikkei has closed 1% higher, and the other main indices are also gaining ground.

The main Asian markets today

The agenda: Optimism keeps rippling through markets

Traders on the floor of the New York Stock Exchange yesterday.
Traders on the floor of the New York Stock Exchange yesterday. Photograph: Spencer Platt/Getty Images

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

There’s a buoyant mood in the markets today, keeping indices at their highest ever levels.

Yesterday the MSCI World Index hit a record high, helped by optimism over European politics and hopes of chunky tax cuts in America.

That sent Wall Street racing last night, with the Nasdaq hitting 6,000 points for the first time ever. And traders expect to hold onto these gains today:

Three factors are working together to keep shares up, and thwart those who think the rally has gone two far.

1) The Europe effect. Investors seem pretty convinced that Emmanuel Macron will defeat Marine Le Pen on May 7th, and become France’s next president. Cautious voices point out that Macron faces a serious struggle to get his reform agenda moving - especially if his En Marche! party don’t make big wins in June’s elections.

2) Donald Trump’s tax reforms. The US president is expected to outline fiscal plans today, including slashing corporation tax from 35% to just 15%. That’s alarmed some experts, with one estimating that it could cost $2 trillion in revenue. But lower taxes = higher profits = higher share prices.

There’s also optimism that a budget deal can be reached to prevent a government shutdown, with Trump apparently giving ground over his Mexican Wall plan:

3) Decent corporate earnings. Yesterday, fast food chain McDonald’s and equipment maker Caterpillar both beat forecasts, bolstering hopes that the global economy is on firmer footings.

Mike van Dulken of Accendo Markets explains:

US equity markets continues their sharp jump higher in anticipation of the Trump administration’s tax reform announcement, with the tech-focused Nasdaq trading above 6,000 for the very first time, while both the S&P500 and Dow Jones indices move closer to their respective all-time highs.

Strong Q1 earnings performances from Caterpillar, McDonald’s and DuPont led the Dow over 200 points higher, while the Materials sector led the S&P to within 20 points of a fresh high.

Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney, agrees that “Confidence has returned”, adding:

Markets seem a lot more relaxed. Globally, we’re seeing a lot of risk-on.”

There’s not much in the economic diary today.

On the corporate front, the London Stock Exchange, Jupiter Fund Management, Metro Bank, chemicals firm Croda and German carmaker Daimler are reporting results this morning.

We’ll be tracking all the main events through the day....

Updated

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Cinemablend
Cinemablend
Disclosure day: If ET made contact, how would we handle the news?
How would people react if an alien civilization actually made contact with us? Space.com talked to experts, who shared a variety of opinions about a possible real-life "disclosure day."
Space
Space
No one at Waffle House remembers Trump’s FEMA official who claims he was teleported there
None of the two dozen workers and regulars interviewed by The New York Times noticed any metaphysical activity
The Independent UK
The Independent UK
Three-week-old mountain lion cub rescued by California biologists
Crimson, seen alone in Santa Monica mountains for days, gets care in Oakland zoo after mother nowhere to be found
The Guardian - US
The Guardian - US
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