Slow progress in U.S. tax reforms weighs on equities – Binary Options Daily Review

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Markets Report

Global Markets

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Monday 13th November 2017
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

 
Market Index Closing Level Move on day Intraday Market Range
CAC 5,380.72 – 27.03 5,375.12 – 5,415.88
DAX 13,127.47 – 55.09 13,111.70 – 13,217.00
Dow Jones 23,422.21 – 39.73 23,392.96 – 23,452.20
FTSE 7,432.99 – 51.11 7,421.73 – 7,500.29
IBEX 10,092.70 – 48.40 10,075.80 – 10,168.00

Closing Markets Summary

Dow Jones

Stocks in the U.S. closed mainly lower on Friday as worries over U.S. tax reform and a delay of the promises cut in corporate taxation weighed on sentiment. However, some strong corporate results limited the day’s decline and kept the Nasdaq just in positive territory. The Senate Finance Committee on Thursday released its draft tax bill, which differed from the House Republicans’ plan. One key divergence is a proposal to defer implementing a cut in corporate tax to a 20% rate from 35% until 2019, rather than next year as put forward in the House plan. Economic data showed that consumer sentiment fell to 97.8 in November, below the 100.7 that had been forecast. Companies that featured included Walt Disney Co. which rose 2.1% despite reporting an earnings and revenue miss late Thursday. Disney also announced it will be making a new “Star Wars” trilogy, as well as developing a live-action TV series tied to the sci-fi classic. The news gave the stock a lift, which in turn limited the Dow’s decline. Nvidia Corp. rose 5.3% after reporting quarterly results out late Thursday that topped Wall Street forecasts. With the day’s advance, the stock has so far more than doubled over the course of 2017. The PHLX Semiconductor Index rose 0.7%. Hertz Global Holdings Inc. fell 2.3% in a volatile session that previously saw the car-rental company’s stock gain as much as 10%. Late Thursday, Hertz reported earnings that came in ahead of market forecasts. J.C. Penney Co. Inc. rose 15% after the department store retailer reported third-quarter revenue that came in above market forecasts. It also reported an adjusted net loss that was narrower than had been forecast. Health-care stocks were the biggest decliners of the day, with the sector down 0.7% in a broad decline. Among the biggest percentage losers, Baxter International Inc. was down 2.1% while Medtronic PLC was off 1.8% and Humana Inc. fell 1.2%. The Dow Jones closed down 39.73 points at 23,422.21, for its first weekly loss in nine weeks. The S&P 500 closed down 2.32 points at 2,582.30, breaking an eight-week winning streak. The Nasdaq Composite closed less than a point higher at 6,750.94 points, leaving it little changed on the week.

Europe

European equity markets closed lower on Friday over disappointment on the outlook for prompt passage of US tax reforms. The pan-European Stoxx 600 index ended down 1.38 points at 388.69. The euro-dollar was up 0.12% at 1.1657. The automobile makers sector was among the weakest areas of the market with the Stoxx 600 gauge of auto&parts manufacturers down 0.66% at 606.48. Economic data showed that Italian industrial output shrank by 1.3% month-on-month in September, led by a fall in manufacturing production of 1.3% forecasts were for a drop of 0.3%. French industrial production was marginally stronger than forecast in September, rising by 0.6% on the month. Companies that featured included insurer Allianz which reported a 17% drop in third quarter net income to €1.6bn, which was in-line with market forecasts, alongside a €2bn share repurchase programme. Steel pipe manufacturer Vallourec lifted its financial guidance for 2017 again on the back of higher oil and gas sales Stateside and cost cuts. On regional markets the French CAC closed down 27.03 points at 5,380.72, the German DAX closed down 55.09 points at 13,127.47 and the Spanish IBEX closed down 48.40 points at 10,092.70.

FTSE

The FTSE 100 closed lower on Friday as the ongoing delays to the passage of tax cuts in the US Congress weighed, even as investors mulled over the latest better than forecast data on manufacturing, industrial production and construction. The market was focusing on the fact that the Senate Finance Committee’s version of the draft tax bill, unveiled on Thursday, included a proposal to defer a cut in corporate tax to 20% until 2019, rather than next year as suggested by the House. Economic data in the U.K. showed that UK industrial production increased more than forecast and manufacturing activity continued to grow but the construction sector entered a technical recession. The Office for National Statistics Industrial production rose by 0.7% month-on-month in September, up from 0.4% a month earlier and above the forecast of 0.3%. Production for the third quarter was also now estimated to have increased by 1.1% quarter-on-quarter, up from 1.0% as September’s production was revised up from the 0.3% expansion pencilled in by the ONS in its preliminary estimate of GDP. This, the sixth monthly increase in a row, was thanks to a 0.7% increase in manufacturing production, similarly beating a 0.3% forecast and up from 0.4% last time. U.K. construction output however slumped 1.6% in September, well below forecasts of 0.3% after August was revised up to 0.8% growth, larger than the 1.0% drop that had initially been pencilled in its quarterly estimate. In trade data, export volumes fell by 1.8% on the quarter, compared with a 1.9% quarterly rise in imports. Companies that featured included EasyJet which moved up 0.63% after the budget carrier announced the appointment of Johan Lundgren as its new chief executive, replacing Carolyn McCall, whose departure was announced back in July. Vedanta Resources was lower after reporting revenue growth of 39% year-on-year in its first half to $6.8bn, while EBITDA was up 37% to $1.7bn. Galliford Try moved higher after the company said its council partnerships arm has benefited from “increased certainty” following recent government announcements and has a record order book, while housebuilding sales rates and the construction order book have remained unchanged since the year end. Student accommodation developer and manager Unite Group was lower after exchanging contracts to acquire a development site in Leeds on a subject-to-planning basis. Fashion house Burberry was down 2.12% after a downgrade to ‘underperform’ at Bernstein, while The FTSE 100 closed down 51.11 points at 7,432.99.

Economic News Expected Today

 USA

Type Period Forecast Previous Importance
Federal Budget Balance Oct -50.0B 8.0B Medium

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
No Data        

Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
No Data        

Other Global Economic Data Expected

 

Type Period Forecast Previous Importance
No Data        

Economic News Round Up MarketsWorld Bars

U.S. consumer sentiment fell in November, dampening optimism over the American economy. The preliminary publication of the data for this month from the University of Michigan’s Consumer Survey Center showed that consumer sentiment fell to 97.8 from 100.7 in the previous month. Forecasts were for an unchanged reading of 107. The current conditions indicator also fell to 113.6 in November, from the previous 116.5, settling below forecasts for an increase to 116.8. Consumer expectations dropped to 87.6 this month, missing forecast for the reading to remain unchanged at 90.5. Inflation expectations for the next 12 months increased to 2.6% from the prior 2.4%, while the reading five years out held steady at 2.5%.

British industrial output increased in September at the fastest pace this year and the goods trade deficit improved. The Office for National Statistics reported that the data for September did not imply any change to its preliminary estimate that Britain’s economy grew by 0.4 percent in the third quarter, picking up a bit of speed from earlier in 2017 but still slower than growth in the euro zone. The Office for National Statistics reported that industrial and manufacturing output shot up by a monthly 0.7 percent in September, the fastest growth for each sector since December last year and above all forecasts for a reading of 0.3 percent for both. The Office for National Statistics also reported that Britain’s goods trade deficit with the rest of the world narrowed by much more than forecast to 11.253 billion pounds in September from 12.350 billion pounds. Forecasts were for a reading of 12.8 billion pounds. There was a sharp improvement in the goods trade deficit with non-European Union countries, which narrowed to 2.982 billion pounds – the smallest since May. The Office for National Statistics also released figures for construction that were much worse than forecasts. Output in September plunged 1.6 percent from August and was up only 1.1 percent on the year – weakest annual growth since March 2016.

Forex Round Up MarketsWorld Bars

The U.S. dollar was holding steady steady near one-week lows against other major currencies on Friday, as concerns over the fate of a highly-anticipated U.S. tax reform bill continued to reduce demand for the dollar. U.S. Senate Republicans unveiled a plan on Thursday which would reduce the corporate tax rate to 20% from 35% and make other significant changes to the individual tax system. However, investors remain cautious as Senate Republican leaders said that they were considering postponing the implementation of the major corporate tax cut until 2019. The EUR/USD was steady at 1.1648, while the GBP/USD rose 0.21% to 1.3173 after the UK Office for National Statistics reported that manufacturing and industrial production both increased by 0.7% in September and both beating forecasts for a rise of 0.3%. The USD/JPY was almost unchanged at 113.39, while USD/CHF added 0.14% to 0.9942. The Australian dollar was lower, with the AUD/USD down 0.18% at 0.7666, while the NZD/USD held steady at 0.6942. The USD/CAD was down 0.09% at 1.2671. The U.S. dollar index was steady at 94.44 just off a one-week low of 94.31 hit overnight.

 
Commodity Round Up MarketsWorld Bars

Gold prices fell sharply on Friday as investors appeared to unwind their bullish positions on the precious metal despite ongoing dollar weakness amid fears of delay to corporate tax cuts. Gold futures for December delivery fell $13.10 to settle at $1274.41 an ounce, for a weekly drop of 0.4%. Silver futures fell 0.54% to settle at $16.88.

Crude oil prices settled lower on Friday as investors worried over an uptick in U.S. production but losses were limited as expectations grew that OPEC would extend its agreement on output curbs. West Texas Intermediate crude futures for December delivery fell 43 cents to settle at $56.74 a barrel. Brent crude fell 37 cents to settle at $63.56 a barrel.

The MarketsWorld Overview MarketsWorld Bars

With no major economic data due today investors will be looking for another driver for the market. The U.S. dollar has been under pressure as the US tax plan has been advancing slower than expected and worries about a delay to the corporate tax cut have weighed, any fresh news could move the dollar.

 

 

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The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects Barry Jenkins’ (MarketsWorld Analyst) current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterized by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable. This message is intended for recipient only and not for further distribution without the consent of MarketsWorld.

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