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Stocks and dollar rise as House passes Trump's tax cuts plans

The dollar and global shares rose on Wednesday, after House Republicans approved President Donald Trump's plans for tax cuts. Treasury yields also increased after a sharp drop the day before.

The Republican-controlled U.S. House of Representatives late on Tuesday narrowly passed Trump's $4.5 trillion tax-cut plan, sending the budget resolution to the Senate, where Republicans are expected to take it up.

Lars Skovgaard is senior investment strategist for Danske Bank.

Tax cuts and less regulation are expected. It is something I expect to happen, and it would be good for the markets if it did.

The mood also improved following reports that the U.S.A. and Ukraine had agreed to terms for a draft mineral deal.

After a mixed session, U.S. Stock Futures recovered. Nasdaq Futures rose 0.7% and S&P 500 Futures gained 0.5%.

The European share market rose for the second consecutive day. The pan-continental STOXX 600 index climbed 1%, setting a record, and blue-chip indices in Frankfurt and Paris, as well as London, all rose between 0.7% to 1.7%.

Tony Sycamore is a market analyst for IG.

The benchmark 10-year Treasury yield rose by 1 basis point to 4.306% after falling almost 10 basis points on Tuesday.

The yield on the two-year bond, which is sensitive for changes in Federal Reserve expectations of interest rates, increased by about 2 basis points to 4.119%.

In the previous session, yields fell to their lowest level in several months as traders increased bets on more Fed rate reductions this year due to growing concerns about the outlook for the largest economy in the world.

The latest survey data released on Tuesday shows that U.S. consumers' confidence dropped at the fastest pace in three-and-a half years in February. This is the latest of a series of surveys that indicate businesses and consumers are becoming more alarmed by Trump's policies.

Fed funds futures indicate that 55 bps will be priced in for easing by the end of the year, which translates to at least two quarter point cuts. This is up from 40 bps about a week earlier.

The U.S. Copper prices rose more than 3.5% on Wednesday after Trump ordered an investigation into possible new tariffs for imports of this metal. The massive power outage that hit Chile, a copper producer, also contributed to the rise.

This week, the dollar recovered some ground following its recent drop to its lowest level since December 10.

The dollar index (which measures the currency in comparison to six other majors) was up by 0.3%.

The yen traded 0.3% higher against the dollar at 149.47 thanks to a rebound in U.S. Treasury rates.

The euro fell 0.3% to $1.0484 but was still close to a month-high. The pound was also near its two-month high and bought $1.2648 last.

Brent crude oil futures fell 0.4% to $72.75 per barrel after falling more than 2% the previous session. U.S. West Texas Intermediate crude (WTI crude) dropped 0.3% to $68,72 a barrel.

Gold remained at $2,913 per ounce.

NVIDIA EARNINGS AWAIT

Nvidia, the company that is the poster child for artificial intelligence, will report its earnings on Wednesday. This could provide clarity about demand and justify sector valuations.

Due to the slow returns and breakthroughs made by China's DeepSeek, investor scepticism about the billions of dollars that U.S. technology firms have invested in AI infrastructure has increased.

Jacob Falkencrone, global head of Saxo’s investment strategy, said that any signs of weakness within Nvidia’s report would have a significant impact on investor sentiment toward AI stocks in general.

This earnings report isn't about Nvidia...it's about if the AI revolution can continue its rapid pace.

This week, some of Europe's top AI stocks fell after an analyst report flagged that Microsoft could slow down on data center leasing. The note lowered sentiment in the industry.

The "Magnificent 7" index, which includes Nvidia as a component, dropped 2.5% Tuesday, its lowest level since November 27.

(source: Reuters)