Investing.com - Asian shares gained on Wednesday as expectations that President Donald Trump would unveil an ambitious tax cutting program supported sentiment, though investors said there was caution as the president has not yet tasted legislative success on his program.
"(T)oday's moves appear to more related to expectations for Trump's impending 'broad principals' tax plan ... It is widely tipped that ... the corporate tax rate (will) be cut to 15 percent from 35 percent. The key for markets will be how will such a tax cut be funded and what is the likelihood of the tax cut being passed by Congress." National Australia Bank economist Tapas Strickland said in a note to clients.
ThinkMarkets Chief Market Analyst Naeem Aslam added that the risk of a looming government shutdown had not been factored in sufficiently. Trump had requested for additional spending for his border wall plans, but has appeared to ease the demands.
Japan's benchmark Nikkei 225 index rose 0.62%. Meanwhile, Toshiba said it would be parting ways with its auditor PricewaterhouseCoopers Aarata, according to the Nikkei. The auditor had not endorsed Toshiba's Q3 earnings which had been released earlier this month.
In a new development, U.S. Secretary of Commerce Wilbur Ross said the government could potentially provide support to Toshiba's U.S. nuclear arm Westinghouse, the Wall Street Journal said. Westinghouse filed for bankruptcy in March. Toshiba shares rose 4.49% following the news.
The S&P/ASX 200 rose 0.72%. BHP Billiton (LON:BLT) cut its production targets for iron ore, coking coal and copper. The miner attributed the cuts to poor weather conditions in Australia and strikes at the Escondida mine in Chile. BHP Billiton shares rose 1%.
Markets in greater China were mostly higher with the Hang Seng Index up 0.53% and the Shanghai Composite inched up 0.02%.
Overnight, U.S. stocks closed higher on Tuesday, after a strong batch of corporate first quarter earnings fuelled risk-on sentiment.
The Nasdaq closed above 6000 for the first ever, while the Dow closed just shy of 21,000, as some of the large-cap constituents of both indexes reported stronger than expected first quarter earnings.
Caterpillar (NYSE:CAT) , McDonald’s, 3M and DuPont (NYSE:DD) reported earnings before the opening U.S. bell that exceeded expectations.
Caterpillar’s quarterly earnings report was the pick of the bunch, as the bellwether industrial company, posted earnings per share (EPS) of $1.28 and sales of $9.822, which was far above analysts’ expectations.
Meanwhile, investors welcomed the release of top tier U.S. economic data, as new U.S. home sales rose to an eighth-month high in March while consumer confidence fell in April.
New U.S. home sales surged to an eight month high in March, which added to the narrative of a strengthening U.S. economy.
The Consumer Confidence Index dropped to 120.3 in April, compared to expectations of a fall to 122.5 for the month.
The rally on Wall Street came a day ahead of a much anticipated update from the Trump administration on tax reform.
President Donald Trump said Friday, he will unveil a tax plan on "Wednesday or shortly thereafter" that includes a “massive tax cut” for individuals and businesses.
The Dow Jones Industrial Average closed 1.12% higher at 20,996. The S&P 500 gained 0.61% and the Nasdaq Composite closed at 6025, up 0.7%.