Global Financial Markets in Turmoil: Anticipation of Trump Tax Bill Vote and Its Impact on Currencies and Stocks
On Tuesday, the world’s financial markets experienced significant fluctuations amid growing expectations regarding the passage of a comprehensive tax reform proposal introduced by U.S. President Donald Trump. Asian markets saw a rally in stock indices, while the U.S. dollar fell to multi-year lows. These movements are driven by concerns that debates in the Senate could influence the country’s economic outlook and its currency valuation. According to Reuters, recent days have seen stock exchanges reach record highs, buoyed by optimism over future trade agreements. However, disagreements about the financial implications of the new bill, which is estimated to increase the U.S. national debt by over 3 trillion dollars, have created uncertainty among investors. In Japan, the Nikkei index declined by 1.3%, driven by the yen’s appreciation against the dollar, which negatively impacts exporters. Meanwhile, oil prices have fallen for the second consecutive session, while gold has seen gains. Ray Attrill, head of FX strategy at the Reserve Bank of Australia, stated that the upcoming days are focused on Senate discussions regarding the bill. Overall, the MSCI Asia Pacific ex-Japan index increased by 0.4%, led by a 1.1% rise in South Korea’s Kospi. Business sentiment indicators from Japan and activity levels in China suggest that the major economies of the region are still experiencing turbulence due to tariff tensions. Japan’s manufacturing sector showed signs of recovery for the first time in over a year, but export prospects remain challenging. China's stock index rose marginally by 0.1%, with the Shanghai Composite increasing by 0.2%. The dollar fell by 0.2% against the yen to 143.79 yen per dollar, while it remained nearly unchanged against the euro at $1.1808. Oil prices declined by 0.5%, reaching $64.80 per barrel, amid expectations of increased OPEC+ output in August. Gold prices rose by 0.6% to $3,322.62 per ounce. Futures on the Euro Stoxx 50 increased slightly by 0.1%, while DAX futures in Germany climbed by 0.2%. The Senate debate on Trump’s broader tax and spending bill has been delayed by lengthy discussions and amendments, with a final vote expected by July 4 – Independence Day in the U.S. Meanwhile, global trade negotiations remain tense, with participants striving to complete new agreements before the deadlines set by Trump. Investors are also awaiting key employment data from the U.S., scheduled for release on Thursday, which could significantly influence market directions.