On 27 September, 2017 – Asian stocks were mostly lower while those in Europe and the US advanced

Investors reacted positively to Fed Chair Yellen’s remarks on Tuesday and tax proposals on Wednesday.
United States
Stocks rebounded from their lackluster performance earlier in the week and closed higher Wednesday. The Dow Jones industrials were up 0.3 percent, the S&P added 0.4 percent and the Nasdaq rallied to close 1.1 percent higher. The strength was partly due to a positive reaction to the release of a Republican tax reform plan, which called for a reduction in the corporate tax rate to 20 percent. A positive August durable goods orders report also lifted investors’ mood.
August durable goods orders were up a monthly 1.7 percent after plunging 6.8 percent in July. Excluding transportation equipment, durable goods orders edged up 0.2 percent after climbing 0.8 percent in July. Orders for non-defense capital goods excluding aircraft, an indicator of business spending, advanced 0.9 percent after climbing 1.1 percent in July. However August pending home sales index tumbled 2.6 percent.
Micron Technology led the semiconductor sector higher after reporting better than expected fourth quarter results and providing upbeat guidance. Facebook and Alphabet rallied. Kimco Realty, a real estate investment trust that owns outdoor shopping centers declined. Procter & Gamble also declined. Nike and Under Armour retreated. Bank of America and Goldman Sachs advanced.
A proposed a tax plan offered by the administration would cut tax rates for both individuals and corporations and also reduce the number of personal tax brackets and nearly doubles the standard deduction used by most Americans. It would lower the top corporate tax rate to 25 percent from its current 35 percent. With months of negotiations likely ahead and many key details missing, it is not clear what kind of plan might ultimately pass.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$17.50 to US$1,282.55. Copper futures were up 0.3 percent to US$2.93. WTI spot crude was up 18 US cents to US$52.06. Dated Brent spot crude was down 74 US cents to US$57.70. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.5 percent. The yields on both the US Treasury 30 year bond and 10 year note were up 7 basis points to 2.85 and 2.30 percent respectively.
European markets
Most European stock indices advanced Wednesday. Investors were encouraged by activity on the M&A front, as Alstom and Siemens agreed to merge their rail operations. The markets also benefitted from a weakening in the euro against the US dollar following Tuesday’s hawkish comments from Federal Reserve Chair Janet Yellen. In a speech to the National Association for Business Economics, she said that we should be wary of moving too gradually given that monetary policy impacts economic activity with a substantial lag. Further she said it would be imprudent to keep monetary policy on hold until inflation is back to 2 percent. The FTSE and DAX both added 0.4 percent and the CAC was 0.3 percent higher. The SMI however, retreated 0.2 percent.
Munich Re increased on reports that it is close to selling some of its primary life insurance units. In Paris, Alstom jumped after signing a memorandum of understanding with Siemens to merge their rail operations in a deal that would create a new European champion. Siemens also was higher. Thanks to rising copper prices, Anglo American, Rio Tinto and Antofagasta were higher. Nestlé and Novartis declined. Credit Suisse, UBS and Julius Baer advanced. Swiss Re and Swiss Life were higher on the day. Royal Bank of Scotland Group gained on a broker upgrade.
The Eurozone’s M3 money supply climbed at a 5.0 percent annual rate and was up a sharp 0.5 percentage points from July’s unrevised reading and was the fastest since March. This was enough to ensure that the 3-month moving average rate was unchanged at 4.8 percent and so remained within the narrow 4.8 percent to 5.0 percent range seen throughout 2017 to date.
French September consumer confidence index reading declined to 101 from 103 in August. This was the third consecutive fall and marked the lowest reading since April when the score was 100. British retail sales grew the most in two years in September according to the latest distributive trades survey. The retail sales balance rose to 42 percent, the highest since September 2015, when the score was 49 percent.
Asia Pacific
Asian stocks were mixed Wednesday, as renewed geopolitical concerns and hawkish comments from Federal Reserve Chair Janet Yellen offset investor optimism over higher oil prices and positive industrial profits data from China. Investors also awaited details of US President Donald Trump’s tax reform plans, expected to be unveiled later in the global market day.
The Shanghai Composite edged up 0.1 percent after official data showed China’s industrial profit growth accelerated sharply in August. Industrial profits grew at a faster pace of 24.0 percent from a year ago in August, following a 16.5 percent jump in July. The Hang Seng index added 0.5 percent.
The Nikkei was down 0.3 percent and the Topix lost 0.5 percent as many heavyweight stocks went ex-dividend, offsetting investor optimism over a declining yen following Ms Yellen’s comments. Automakers Toyota and Nissan Motor fell retreated.
The S&P/ASX and All Ordinaries were both down 0.1 percent after Fed Chair Janet Yellen said a gradual and cautious approach to rate increases will be appropriate amid uncertainty surrounding inflation. Westpac gained while the other three banks ended lower. Miners including BHP Billiton, Rio Tinto and Fortescue Metals Group finished higher.
The Kospi slipped 0.1 percent as foreign investors sold stocks as the tensions between North Korea and the United States persisted. The Sensex tumbled 1.4 percent amid concerns over sagging growth and steep valuations after analysts flagged the downward revisions to earnings estimates.
Looking forward
September Eurozone EC economic sentiment will be released. In the US, the final estimate of gross domestic product will be reported along with second quarter corporate profits. August international trade in good and weekly jobless claims, money supply and fed balance sheet will be released.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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