Wall Street has been struggling minutes before the vote on the bill to change the US tax system. The main downsides are observed in the big technology companies that are expected to gain the most from the tax cuts.
At this point, sentiment remain positive, and most market players, are of the opinion, that after the latest changes to the draft bill, they will be able to collect enough votes in the Senate to pass the reform.
The latest changes to the draft law envisage a reduction in the corporate tax rate from 35% to 21%, with investors interpreting such a change as an opportunity for large share, buybacks and paying higher dividends on the part of the companies, that will benefit most from the change. As such, banks and technology companies are considered.
What to expect from markets?
Changes in tax rates will strongly affect the listed companies, but we must bear in mind that much of this tax reform has already been accumulated by the markets. In this case, we need to be cautious as short-term adjustments are not excluded, especially for the sectors that will benefit most from the Trump Tax Plan.
We are waiting and any index adjustment would give us a good opportunity to add to the long positions.
Source: Reuters
Jr Trader Petar Milanov
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