US stocks open modestly higher as investors await tax plan

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Wall Street equities were little changed on Wednesday as investors appeared to take stock ahead of a tax plan from the White House that is expected to be revealed later today.

The S&P 500 was up 0.1 per cent at 2,389.54, while the Dow Jones Industrial Average rose 0.2 per cent to 21,019.60. The Nasdaq Composite, which breached the 6,000 level for the first time yesterday, was also up 0.1 per cent at 6,028.75.

The White House has pledged to lower the corporate tax rate to 15 per cent in an effort to boost competitiveness and revive economic growth. The plan could also include a repatriation tax of 10 per cent on offshore earnings, lower than the current 35 per cent, with the hope of raising government revenue. But critics have cautioned that the plan could have a hard time getting through deficit hawks in Congress.

“The most likely scenario is that a very aggressive tax plan is released – in which case the market probably has a bit of energy left to pop,” said Peter Tchir at Brean Capital. “Anything less than an aggressive plan likely results in stock weakness.”

Signs of dissent within the Republican party could however rattle markets after pockets within Mr Trump’s own party torpedoed his healthcare plan that was intended to repeal and replace Obamacare earlier this year. “If any Republican groups break ranks then I think the market fades very quickly as tax reform is the last key support for this market,” Mr Tchir, said.

With no major economic data on the calendar investors are also parsing through a hefty earnings load.

Haven assets were little changed with gold prices flat at $1,263.01 a troy ounce. The yield on the 10-year US Treasury, which moves inversely to price, was little changed at 2.334 per cent.

The dollar index, a measure of the buck against a basket of peers, rose 0.4 per cent to 99.18.

Meanwhile, oil prices ticked lower ahead of the weekly US crude stockpile report. West Texas Intermediate, the US benchmark was down 0.9 per cent to $49.10 a barrel, while its international counterpart, Brent was down 1 per cent $51.56 a barrel.

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