Morgan Stanley flat after update on tax overhaul

Morgan Stanley ended a touch lower on Friday, down 0.04% at $53.11 per share after the group released a statement outlining the effect US President Donald Trump’s tax bill would have on the bank. It confirmed the group would take a $1.25bn hit in its fourth quarter earnings due to the tax overhaul. This $1.25bn figure is attributable to a $1.4bn tax provision following the re-measurement of certain net deferred tax assets, while $160mn of this would be offset by other positive effects. This follows on from Goldman Sachs’ announcement at the end of last year where it stated the new tax bill would it affect its fourth quarter earnings by around $5bn.

In currencies, the rand weakened against the dollar on Friday morning, but erased most of its losses following the release of worse-than-expected US jobs data. In December, US non-farm payrolls increased by 148,000, much lower than estimates of 190,000. Nevertheless, the unemployment rate remained unchanged at 4.1%. After a previous close of R12.297/$ on Thursday, the local currency weakened to a low of R12.384/$ at 14:00. However, by 23:00, the rand was once again above the R12.30/$ level. The local currency remained stable over the weekend, and is at R12.31/$ this morning.

In Asia, markets are higher, albeit only marginally so, helped along by last week’s rally in global markets. The Shanghai Composite gained 0.35% by the break to just above the 3,400 index point level, with the index set to extend its recent run of gains. The Hang Seng is mostly unchanged, up 0.01% at 30,814.49 index points. The Australian ASX is also in positive territory this morning after it added 0.12%, buoyed by an uptick in banking shares. The Japanese Nikkei remained closed this morning due to the Coming of Age Day public holiday.

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