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ASX this week: Trump's tax revamp driving markets

ASX this week: Trump's tax revamp driving markets

An upcoming overhaul of business and individual taxes in the US is likely to continue supporting sentiment in share markets, while several key ASX 200 heavyweights will unveil their half-yearly results this week.

Australian stocks jumped last week, with all 11 sectors within the S&P/ASX 200 index posting gains – ranging from 0.3% to 3.5% – lifting the benchmark stock gauge 1.8% higher over five days to 5,720.6.

On Friday:

  • Brent oil advanced 1.9% to US$56.70 a barrel; down 0.2% for the week.
  • WTI crude increased 1.6% to US$53.86 a barrel; up less than 0.1% for the week.
  • Iron ore with 62% content delivered to Qingdao, China, soared 3.3% to US$86.62 a dry metric tonne, surging 5.4% for the week.
  • Spot gold rose 0.4% to US$1,233.62 an ounce; up 1.1% for the week.
  • Australian dollar traded at 76.74 US cents, weakening less than 0.1% over the week; the currency fell marginally to 76.73 US cents at 10:50am Sydney time today.

What to watch this week

Investors might continue to be encouraged by the prospect of upcoming plans to reduce taxes in the US, CommSec said.

President Donald Trump said last Thursday at the White House that he had a “phenomenal” plan to restructure business taxes, which could be revealed over the next two to three weeks, according to a Bloomberg report.

White House Press Secretary Sean Spicer said at a separate event that day that the plan would be the most comprehensive business and individual tax revamp since 1986, the report said.

The Dow Jones Industrial Average surged a total 1.1% in the final two trading days last week following the announcement on impending tax cuts.

The sentiment flowed through to Asian markets on Friday, with major stock markets such as Japan, Shanghai, Hong Kong, Australia and South Korea all advancing.

Meanwhile, the ASX earnings reporting season is in full swing this week, with many key ASX 200 companies lined up to release their financial results.

These include Ansell, JB Hi-Fi and Newcrest Mining on Monday; Cochlear and Treasury Wine on Tuesday; Commonwealth Bank, CSL and Wesfarmers on Wednesday; Sydney Airport, South32 and Telstra on Thursday; and ASX, the local stock exchange itself on Friday.

The past two weeks of the reporting season saw significant increases and declines in certain ASX companies, some of which made it to the lists of best and worst performers, as investors responded to their financial performance and profit prospects.

On the economy front, Australia’s employment data for January is scheduled to be released on Thursday.

“We expect a more modest 5,000 lift in jobs in January with the jobless rate unchanged at 5.8%,” said CommSec.

Stock movers

Below are the five best- and worst-performing ASX 200 stocks for the week ended Friday, 10 February.

Company/Index

ASX code

Weekly price change

Aconex

ACX

+15.3%

Seven Group

SVW

+14.6%

Bellamy's Australia

BAL

+12.4%

Mayne Pharma Group

MYX

+11.4%

Bega Cheese

BGA

+10.5%

S&P/ASX 200

XJO

+1.8%

Western Areas

WSA

-3.8%

James Hardie Industries

JHX

-4.2%

Tabcorp

TAH

-5.9%

South32

S32

-6.6%

Genworth Mortgage Insurance

GMA

-14.9%

Past performance is not a reliable indicator of future performance. Source: Bloomberg

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. The inclusion of companies in this article does not constitute a recommendation and it’s vital to remember that the value of shares in any company can fall as well as rise, which means you could lose money by investing in them. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia.