May 1, 2017 – Weekly Market Commentary



 

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Lucia Mutikani – Reuters
U.S. First Quarter Growth Weakest in Three Years as Consumer Spending Falters

Summary:
US GDP rose 0.7% during Q1, the weakest pace in three years. The weak performance was influenced by a contraction in consumer spending activity and government spending. The slowdown was cushioned by accelerated business spending, led by a rebound in the energy sector, and nonresidential structures. Although consumer spending slowed, wage growth was the fastest in 10 years, and consumer and business confidence remained near highs.

 

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Sahil Kapur and Shannon Pettypiece – Bloomberg
White House Unveils Trump’s Opening Tax-Cut Bid

Summary:
Treasury Secretary Steven Mnuchin announced the Trump administration’s newest tax bid. Proposed cuts would benefit businesses, the middle class, and certain high-earning individuals. The plan calls for cutting the federal income-tax rate to 15% for corporations, small businesses, and partnerships of all sizes. For individuals, the proposal calls for condensing the existing seven income tax rates to just three with a max rate of 35 percent.

 

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Richard Saintvilus – Nasdaq, Inc.
Nasdaq Crosses 6000 For The First Time Ever: What This Means For Investors

Summary:
The Nasdaq Composite Index broke the 6,000 mark for the first time. It has been 17 years since the index its last milestone of 5,000. Crossing this psychological level indicates that investors are in full “risk-on” mode. With corporate earnings on the rise and technology companies leading the markets, investors’ appetite for risk is likely to support further growth in the index.

 

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Dalius Simenas and Ian Wishart – Bloomberg Politics
EU Harden’s Brexit Position on Financial Services, Citizens

Summary:
EU governments have added limits on financial services and explicit demands on citizens’ residency rights to their negotiating plan with the UK. Separating financial services from future trade agreements increases the likelihood that financial companies will lose “passporting” rights enabling them to do business in the bloc. The proposal is a blow to UK Prime Minister Theresa May.

 

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Franck Dixmier – Allianz Global Investors
French Risk Premium Could Persist Until June

Summary:
The outcome of the first round of the French elections has led to a substantial rise in investors’ risk appetites. With polls indicating a likely victory for Macron, the risk-on attitude will likely be sustained. Looking ahead, France’s legislative elections in June are the next important event for the eurozone. Mr. Macron’s party will have a tough battle to secure a parliamentary majority. Lacking majority power would undermine his reform ambitions and likely slow momentum in eurozone markets.

 

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Jeffrey Kleintop – Chief Global Investment Strategist 
What the Coming Tax Cuts Mean for the Stock Market

Summary:
The US isn’t the only country looking to cut corporate taxes. France, Germany, Japan, and the UK are all considering lowering corporate tax rates in the near future. This is good news for stock markets because it should mean a boost to after-tax profits. Looking at the MSCI World Index, a reduction in the corporate statutory tax rate of 1% can lift profits by around 0.5%. The financial, telecom, utilities, and services sectors get the most benefit from tax cuts while healthcare and technology will get the least benefit.

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