U.S. stock indexes hit fresh record highs on hope of tax bill being passed this week. Binary option daily review

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Markets Report

Tuday 19th December 2017
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

 
Market Index Closing Level Move on day Intraday Market Range
CAC 5,420.58 + 71.28 5,386.40 – 5,427.87
DAX 13,312.30 + 208.74 13,206.10 – 13,332.00
Dow Jones 24,792.20 + 140.46 24,739.56 – 24,876.07
FTSE 7,537.01 + 46.44 7,490.57 – 7,544.26
IBEX 10,244.10 + 93.70 10,188.10 – 10,257.80

Closing Markets Summary

Dow Jones

Stock indexes in the U.S. closed at record highs as expectations grew that tax cut legislation would be passed this week. The Dow posted its 70th record close of the year, the highest-ever number of record closes in a calendar year. The day’s gains were across the board with eight of the 11 primary S&P 500 sectors closing in positive territory on the day. Financials, which are seen as the biggest beneficiaries of the tax legislation, were among the biggest gainers of the day, up 0.7%. Separately, energy shares rose 0.8%. Speaking on several Sunday talk shows, Treasury Secretary Steven Mnuchin said he has “no doubt” that the GOP’s tax bill will make it to the desk of President Donald Trump this week. Optimism that the Republicans will have the votes they need for passage built last week after two holdouts, Sens. Bob Corker of Tennessee and Marco Rubio of Florida, pledged their support for the tax overhaul. Among other changes, the bill would lower the corporate tax rate to 21% from 35%, which would serve as an immediate boost to earnings. That could serve as a tailwind to equity prices, although experts are split on whether it would result in more hiring or higher wages, as the government has claimed. Economic data showed that the National Association of Home Builders’ monthly sentiment index jumped five points to 74 in December, its highest reading since 1999. Companies that featured included financial stocks which were broadly higher, Wells Fargo & Co. rose 1.8% while Bank of America Corp. rose 1.5%. Large-capitalization technology and internet stocks helped support the Nasdaq, with Apple Inc. rising 1.4% and Amazon rose 1%. Akamai Technologies Inc. rose 14% after activist hedge fund Elliott Management Corp. on Friday reported a 6.5% stake in the internet technology company. Oracle Corp. fell 1.2% after the software company struck a $1.2 billion deal to buy Australian project-management software provider Aconex Ltd. Aconex shares closed up 44% higher in Sydney. Twitter Inc. rose 11% after analysts at J.P. Morgan upgraded the stock to buy from neutral, citing product improvements that are under way, including a new emphasis on live video and a better user interface. Dow Jones closed up 140.46 points at 24,792.20. The S&P 500 closed up 14.35 points at 2,690.16. The Nasdaq Composite closed up 58.18 points at 6,994.76.

Europe

European equity markets closed higher on Monday for the first time in four sessions, with banks the best performing sector on hopes that the highly anticipated tax reform in the U.S. will get passed this week and provide a boost for the financial sector. The pan-European Stoxx Europe 600 index rose 1.2% to close at 392.66, marking its highest close since early November. The euro rose to 1.1805 against the dollar from 1.1748 late Friday in New York. Economic data showed that euro zone inflation for November was confirmed at 1.5%, in line with the flash estimate. Companies that featured included Thales SA which rose 8.2% and Gemalto NV which added 5.6% after news Thales will buy the Dutch security company for €4.8 billion. Buwog AG rose 17% after Germany’s Vonovia SE made a cash offer to acquire the Austrian property company in a €5.2 billion euro deal. Green energy companies rose after the Republican tax bill released late Friday preserved tax credits for the wind and solar energy. Vestas Wind Systems AS rose 4.2% and Siemens Gamesa Renewable Energy SA rose 1.9%. EasyJet PLC fell 2.8% after the discount airline said it has snapped up part of Air Berlin PLC’s operations at Berlin Tegel airport. Air Berlin shares ended up 25%. IG Group Holdings PLC fell 9.3% after flagging concerns over the European Securities and Markets Authority’s tighter-than-expected clampdown on the sector. On regional markets the French CAC closed up 71.28 points at 5,420.58, the German DAX closed up 208.74 points at 13,312.30 and the Spanish IBEX closed up 93.70 points at 10,244.10.

FTSE

The FTSE 100 closed higher on Monday as U.S. on the possibility a corporate tax cut will be passed by U.S. lawmakers this week. But the benchmark FTSE 100 underperformed the rest of Europe as the pound gained against the dollar. The pound rose to 1.3397 against the dollar up from 1.3322 late Friday in New York. Against the euro, sterling rose to 1.1351 versus €1.1340 on Friday. The moves came after Treasury Secretary Steven Mnuchin on Sunday said he has “no doubt” the Republican-backed tax bill will be passed by lawmakers and make it to President Donald Trump’s desk this week to be signed into law. The renewed optimism comes after two holdouts, Sens. Bob Corker of Tennessee and Marco Rubio of Florida, pledged their support for the tax proposals. The U.K. Prime Minister Theresa May met with lawmakers to discuss what’s next for the Brexit process after EU leaders on Friday agree to move forward to the second phase of talks. The prime minister told fellow MPs that Britain will be able to get a “bespoke” trade deal with the EU after Brexit, even as the EU’s main negotiator Michel Barnier said there was “no way” that would happen. May, in a column for the Sunday Telegraph, said the government “we will not be derailed from this fundamental duty to deliver the democratic will of the British people.” Companies that featured included banking stocks which have been among big beneficiaries from prospects of tax cuts and reforms in the U.S., HSBC Holdings PLC rose 0.6%, Barclays PLC rose 1.1% and Lloyds Banking Group PLC rose 0.5%. Mondi PLC rose 2.2% after Deutsche Bank raised its rating to buy from hold on the paper and packaging company. IG Group Holdings PLC fell 9.3% after flagging concerns over the European Securities and Markets Authority’s tighter-than-expected clampdown on the sector. The FTSE 100 closed up 46.44 points at 7,537.01.

Economic News Expected Today

 USA

Type Period Forecast Previous Importance
Building Permits Nov 1.278M; -3.1% m/m 1.316M; 7.4% m/m High
Current Account Q3 -117.2B -123.1B Medium
Housing Starts Nov 1.250M; -3.2% m/m 1.290M; 13.7% m/m Medium
Redbook Dec   -0.7% m/m; 3.3% y/y Low

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
Ifo Business Climate (Germany) Dec 117.6 117.5 High
Wages in Euro zone Q3   2.00% y/y Medium
Labour Cost Index (euro zone) Q3   1.80% Low

Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
No Data        

Other Global Economic Data Expected

 

Type Period Forecast Previous Importance
ANZ Business Confidence (New Zealand) Dec   -39.3 Medium
RBA Meeting Minutes (Australia) Dec     High
SECO Economic Forecasts (Switzerland) Dec     Low

Economic News Round Up MarketsWorld Bars

Euro zone inflation rose in November but still came in below the European Central Bank’s target rate. The European Union’s statistics office reported that the consumer price index rose at an annual rate of 1.5% in November, up from 1.4% in October. Meanwhile the index rose by 0.1% month-over-month in November, unchanged from the preliminary reading. The revisions was in line with expectations. The ECB targets inflation of close to, but just below, 2%. Core inflation, which excludes energy and food prices and is closely watched by the ECB, rose by an annualized 0.9%, the same as the prior month.

British factories matched a three-decade high for orders this month, the Cofederation of British Industry reported that its industrial order book balance remained at +17 in December, its joint highest level since August 1988.

Forex Round Up MarketsWorld Bars

The U.S. dollar extended losses against other major currencies on Monday, as investors remained cautious regarding recent progress made on the U.S. tax reform front. Trading volumes were expected to become thinner throughout the week, ahead of the Christmas holiday. The euro found support after Germany’s Social Democrats agreed on Friday to open coalition talks with Chancellor Angela Merkel, providing a chance to end the country’s political deadlock. However, the talks are not expected to begin until January. Data in the region showed that euro zone inflation rose in November but still came in below the European Central Bank’s target rate. The EUR/USD was up 0.55% at 1.1844. The GBP/USD was up 0.62% at 1.3403. The USD/JPY was down 0.20% at 112.38 and the USD/CHF was down 0.27% at 0.9878. The Australian and New Zealand dollars were both firmer, with the AUD/USD up 0.21% at 0.7663 the NZD/USD was up 0.20% at 0.7009. The USD/CAD was up 0.08% at 1.2875. The U.S. dollar index was down 0.46% at 93.03.

 
Commodity Round Up MarketsWorld Bars

Gold and silver prices both ended moderately higher on Monday, carrying on their upward movement from the gains seen last week. The weaker U.S. dollar index also worked in both metals favour. February gold was up $8.40 an ounce at $1,265.90. March silver was up 13.7 cents at $16.20 an ounce.

Crude oil prices fell on Monday as rising US output offset support from the Forties pipeline shutdown, while a Nigerian oil union strike raised the prospect of supply disruptions. West Texas Intermediate crude futures for January delivery fell 14 cents to settle at $57.30 a barrel. February Brent crude fell 8 cents to settle at $63.15 a barrel.

The MarketsWorld Overview MarketsWorld Bars

US building permits jumped to an annualized level of 1.32 million in October, but this level is not forecast to hold: 1.28 million is forecast in this reading. Housing starts also looked good with 1.29 million and a level of 1.25 million is forecast for November.

 

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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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