Stocks Steady as Tax Plans, Earnings Come Into Focus
November 08 2017 - 4:10AM
Dow Jones News
By Riva Gold and Ese Erheriene
-- Bank shares lower
-- Tax plan in focus
-- China trade surplus widens
Moves in global stock markets were muted Wednesday in the
absence of major catalysts, with investors largely focused on a
handful of corporate results and prospects for a tax overhaul in
the U.S.
The Stoxx Europe 600 edged up less than 0.1% shortly after
markets opened, following a quiet session in Asia. Futures pointed
to a flat opening for the S&P 500 after it snapped a five-day
winning streak on Tuesday.
Bank shares continued to lag behind in Europe and Asia on
Wednesday after four straight days of declining Treasury yields and
a rise in German bund prices. Lower yields tend to hurt lenders'
profits, since they earn money on the difference between what they
pay on deposits and what they charge to lend money.
Bank shares in Europe have fallen around 3.5% so far this
quarter--the worst performing sector. On Wednesday, shares of
French lender Crédit Agricole fell 4.2%, leading the sector lower,
after its net profit recorded a double digit fall on the year.
Dutch bank ABN AMRO Group also fell after it reported an 11% rise
in third-quarter net profit.
Yields on 10-year Treasurys were little changed Wednesday at
2.312% from 2.309% Tuesday, while German bund yields edged down to
0.327% from 0.330%. Yields move inversely to prices.
Both Treasury yields and the U.S. dollar have come under modest
pressure in recent sessions amid concerns that disagreements could
force the GOP to make changes to its tax bill and slow down plans
to pass it by year's end.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, edged down 0.1%.
A year after the U.S. presidential election, investors have
realized that anything related to tax reform will take longer and
look different than what was initially discussed, said Jonathan
Mackay, investment strategist at Schroders.
"We do see a high probability for a tax cut, but it will
probably be different from what we've seen from the Republican plan
so far," he added.
Elsewhere in Europe, shares of Tullow Oil rose 3.3% after the
independent oil & gas, exploration and production group raised
its production guidance. That helped Europe's energy sector brush
off a modest decline in crude oil prices, with Brent crude last
down 0.1% at $63.55 a barrel after falling 0.9% on Tuesday.
Earlier, Asian stocks were little changed following a lackluster
session on Wall Street after many indexes across the region notched
multiyear highs on Tuesday.
Hong Kong's Hang Seng Index swung between small gains and losses
from a 10-year high with shares of China Literature nearly doubling
on their first day of trading amid the global frenzy for technology
stocks.
The Tencent Holdings unit, which operates an online library, saw
immense interest its initial public offering, with retail
investors' orders reaching about 625 times the amount of stock
available. The company ultimately raised about $1.1 billion.
China Literature's connection with Tencent also added to the
offering's popularity, as the tech giant's stock has more than
doubled this year.
"Companies like Tencent are seen as unstoppable," said Joshua
Crabb, head of Asian equities at Old Mutual Global Investors.
Tencent shares, which have logged five straight record closing
highs, were down 0.7% on Wednesday.
China's equity markets inched upward, as margin debt--a proxy
for investor risk appetite--rebounded to a 22-month high of 1.01
trillion yuan ($152 billion) on Tuesday, a sign of strong buying
interest. The Shanghai Composite Index gained 0.1%.
That came despite lackluster October trade data, with China's
export and import volumes contracting from September, reflecting a
slight easing of growth in other emerging markets along with weaker
domestic demand as a result of slower infrastructure spending.
Elsewhere, Japan's Nikkei Stock Average was down 0.1% after the
index jumped 1.7% in the previous session to near-26-year
highs.
Saumya Vaishampayan and
Ben Collins
contributed to this article.
Write to Riva Gold at riva.gold@wsj.com and Ese Erheriene at
ese.erheriene@wsj.com
(END) Dow Jones Newswires
November 08, 2017 03:55 ET (08:55 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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