Closing Market Wrap 12/19/17: ‘acta non verba’.

In European Equity Markets stocks pulled back on Tuesday in a broadly weaker market as a rally inspired by investor optimism about a tax reform in the United States lost its strength.

Expectations that the long-anticipated U.S. tax bill will pass this week lifted the pan-European STOXX 600 benchmark by as much as 0.2 percent in morning trade. But the index turned lower and accelerated losses in afternoon, ending down 0.4 percent.

Top faller in Europe was Steinhoff,  down 20 percent, after the South African retailer hit by an accounting scandal said it had started to lose credit lines from lenders.

Among the gainers was chipmaker Dialog Semiconductor which rose more than 8 percent after Tsinghua raised its stake in the company further to 9 percent.

In Currency Markets the dollar rose against most currencies on Tuesday, helped by upbeat U.S. housing data, but gains were limited by doubts about the overall impact of a major U.S. tax overhaul plan on the economy. In mid-morning trading, the dollar rose 0.2 percent against the yen to 112.82 yen.

Against the euro, however, the dollar was weaker. The euro was last at $1.1814, up 0.3 percent.

Sterling lost 0.31 percent to 1.3342.

Elsewhere, the Australian and New Zealand dollars fell, with Aussie down 0.12 percent at $0.7653 and with Kiwi falling 0.10 percent to trade at $0.6988.

The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rallied 0.03 percent to 93.26.

In Commodities Markets  oil edged up towards $64 a barrel on Tuesday, helped by a North Sea pipeline outage, OPEC-led supply cuts and expectations that U.S. crude inventories had fallen for a fifth week.  But rising U.S. output has put a lid on gains. Shale production will rise to a record in January, according to a government forecast published on Monday, as higher prices encourage increased drilling.

Brent crude was up 0.2 percent to $63.54 a barrel.

U.S. crude gained 0.4 percent to $57.41.

Gold, which strengthens on the dollar’s weakening, held firm at $1,260 an ounce. Spot gold fell 0.1 percent to $1,260.54 an ounce. U.S. gold futures fell 0.14 percent to $1,263.70 an ounce.

Copper rose 0.56 percent to $6,943.50 a tonne.

In US Equity Markets stocks fell on Tuesday, ahead of a vote on a bill to overhaul the U.S. tax system, weighed down by an Apple-led pullback after two strong session of gains on rising hopes that the U.S. Congress will vote in favor of the bill.

The Dow Jones Industrial Average was down 0.24 percent, at 24,733.73.

The S&P 500 was down 0.15 percent, at 2,686.16.

The Nasdaq Composite was down 0.31 percent, at 6,972.84.

Altria rose 2 percent after Berenberg upgraded the stock saying a lower tax rate would boost the tobacco company’s profit and shareholder payouts.

Wal-Mart rose 0.8 percent after Citigroup upgraded the stock to “buy”, on expectations that the retailer’s shares will rise further in 2018.

In Bond Markets  Germany’s longest-dated bonds led a sell-off in euro zone debt markets on Tuesday following a rise in the country’s issuance plans for 2018, strong U.S. economic data, and expectations that a U.S. tax overhaul will be passed this week.

Yields on the 30-year Bund rose nearly 9 basis points to 1.20 percent by afternoon trades and were set for their biggest one-day jump in almost six weeks.

Germany’s 10-year Bund yield jumped to 0.384 percent.

U.S. Treasury yields also rose and prices fell on the unexpectedly strong domestic housing data.

Benchmark 10-year notes last fell 16/32 in price to yield 2.45 percent, from 2.392 percent.

The 30-year bond last fell 40/32 in price to yield 2.8058 percent, from 2.744 percent.

-R.W.N II

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