How news Tax reform effect NASDAQ
By: Ahura Chalki
Market analyst – IFC Markets
G7 members agreed on a minimum of 15% global corporate tax. On the other hand, the new administration in the white house is planning to raise the current 21% tax to 28%. And it will be much crucial while some insiders pointed out that this difference in taxation would mean that “US companies have to pay additional taxes on profits in certain countries.”
In the long way that G7 started, the Tax will be based on the income sources of these companies rather than the location of their headquarters, and now the G7 countries will have to negotiate with the G20 countries and the OECD. The process is likely to take several months. Even in the United States, it can only be implemented with 2/3 of the Senate’s votes.
Most market giants welcomed the plan because they know that there will still be much other Tax Havens around, and they will be even more involved—countries like Ireland, Cyprus, Hungary, British Virgin Islands, Cayman Islands, Jersey, etc. However, in financial markets, increasing the Tax is not something terrible. According to the data, since 1926, the United States has increased corporate income tax and personal income tax by 13 and 14 times, the S&P index has recorded an increase just a year after the tax reform.
Even though Tax is not the only factor affecting the markets, we have to consider the growth of enterprises and the overall economy. It may also be necessary to consider the total market demand, personal consumption, corporate investment, default rate, etc…
NASDAQ, Fundamental and technical review
Since the index mainly includes the tech-giants of the market, tax reform must affect that ND100 much more than any other index. However, this is not some fast change, and its implementation will take time, so market reaction and effect will not be an immediate reaction. In the long term, some investors will think about that, and it is mostly about big investors and not retail sellers, so we are not expecting any fast and deep market reaction.
Technically, it is in a clear daily uptrend, above 100 DMA, OBV trend line, and Parabolic SAR dots, while MACD histograms also again back above 0-line. Pivot point sits at 13,775 and trading above this level, strongly support the continuing uptrend.
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