November 2, 2017 by Lorcan Roche Kelly
Trump to pick Powell for Fed chair, Bank of England expected to hike rates for first time in a decade, and there’s no such thing as a permanent tax cut. Here are some of the things people in markets are talking about today.
President Donald Trump plans to nominate Federal Reserve Governor Jerome Powell as the next chair of the U.S. central bank, according to four people familiar with the decision. Markets deem Powell as the continuity candidate, with his public pronouncements largely in line with Janet Yellen’s policies. Trump will make the formal announcement in the Rose Garden at 3 p.m. Eastern Time.
The Bank of England is widely expected to raise interest rates for the first time in over a decade when it announces its latest monetary-policy decision at 8:00 a.m. With only eight of the 60 economists polled by Bloomberg expecting no change at today’s meeting, market reaction to a hike should be relatively muted. The broader question remains as to whether higher interest rates are what the U.K. economy needs ahead of Brexit.
The GOP tax plan is expected to be unveiled later today, with one Republican lawmaker familiar with the negotiations on the text of the document saying that the key corporate tax cut from 35 percent to 20 percent will be phased out after a decade. For individuals, there will be tax cuts for most, except for earners at the very top of the scale, with the 39.6 percent tax rate remaining. There’s also a plan to impose a tax of as much as 12 percent on multinational companies’ accumulated offshore earnings.
Overnight, the MSCI Asia Pacific Index gained 0.2 percent, while Japan’s Topix index closed 0.4 percent higher, boosted by automakers ahead of a three-day weekend. In Europe, the Stoxx 600 Index was 0.1 percent lower at 5:45 a.m. amid mixed earnings results, with investors also braced for the BOE decision. S&P 500 futures slipped 0.1 percent, the 10-year Treasury yield was at 2.372 percent and gold was unchanged.
Apple Inc. is due to release fourth-quarter earnings after the bell today, with investors likely to focus on any updates on iPhone X production delays. Tesla Inc. shares are down about 6 percent in pre-market trading after the company pushed back its production schedule for the key Model 3 car in its results announcement yesterday. Facebook Inc. shares are also trading lower ahead of the open as the company’s guidance disappointed investors.