By IFCMarkets
US major stock indices inched lower on Tuesday as tax cuts delay concerns undermined market sentiment. The dollar weakened on euro rally: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, fell 0.7% to 93.81. The S&P 500 lost 0.2% to 278.87 led by energy and materials stocks. Dow Jones industrial average rose slipped 0.1% to 23409. The Nasdaq composite index fell 0.3% to 6737.87.
Tax reform uncertainty weighed on investor confidence as earnings season draws to end. Senate Republicans on Tuesday linked repealing a key component of Obamacare to their tax bill. This raises risks for the Republicans’ tax reform. Treasury Secretary Steven Mnuchin said the Trump administration wouldn’t support tax legislation with corporate tax above the proposed 20% rate as part of any future compromise between the House and the Senate. Positive data were shrugged off by markets: the producer price index for October remained steady at 0.4% over month when a decline to 0.1% increase was expected. And the NFIB small business index rose to 103.8 in October, up from 103 in September. Today at 14:30 CET inflation report will be released, the outlook is bearish for the dollar.
European stocks fell sixth session in a row on Tuesday on stronger euro and weak Chinese data. Both the euro andBritish Pound rose against the dollar. The Stoxx Europe 600 fell 0.6% on above 1% jump in euro. German DAX 30 lost 0.3% closing at 13033.48. France’s CAC 40 closed 0.5% lower and UK’s FTSE 100 slipped 0.1% to 7414.42. Markets opened 0.1%-0.2% higher today.
Euro rallied after Germany’s statistics agency reported German economy grew at above expected 2.8% over year rate in the third quarter when a 2.3% growth was expected. Italy’s growth of 1.7% was the largest since 2011 and also above expectations. Mining shares fell after data showed China’s industrial output slowed in October: Chinese companies are major buyers of industrial metals. Pound rose despite a 3% rise in UK inflation was 0.1 percentage point below expectations.
Asian stock indices are down today tracking Wall Street losses overnight. Nikkei lost 1.6% to 22028.32 as yen strengthening accelerated against the dollar. Market reaction was muted to the report Japan’s GDP rose 0.3% over quarter during the July-September period, the seventh straight quarter. Chinese stocks are down: both the Shanghai Composite Index and Hong Kong’s Hang Seng Index are 0.7% lower. Australia’s All Ordinaries Index lost 0.6% despite resumed weakness in Australian dollar against the greenback as the 0.5% growth in wages in Q3 was lower than expected.
Oil futures prices are steady today after big drop Tuesday. Prices fell yesterday after the International Energy Agency (IEA) cut its global crude oil demand forecasts and warned about rising US shale oil output. The IEA on Tuesday cut its oil demand growth forecast by 100 thousand barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017. January Brent fell 1.5% to $62.21 a barrel on Tuesday. The American Petroleum Institute industry group said late Tuesday US crude stocks rose by 6.5 million barrels last week. Today at 16:30 CET the Energy Information Administration will release US Crude Oil Inventories.
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