On 28 September, 2017 – Shares were mixed as investors tried to evaluate the US administration’s tax proposals

A heavy day of new economic data ends the third quarter.
United States
Stocks inched higher Thursday in lackluster trading. The Dow Jones industrials and the S&P were 0.1 percent higher while the Nasdaq was unchanged (up 0.19 point). The S&P closed at a record high. Investors hope President Donald Trump will be able to make progress on Wednesday’s tax proposals. The GOP plan includes a reduction in the corporate tax rate to 20 percent from 35 percent, a consolidation in the personal income tax brackets to three from seven, and a sharp increase in the standard deduction. No details were provided.
McDonald’s advanced on a broker upgrade. AbbVie rallied after announcing a global resolution of intellectual property-related litigation with Amgen. Abbott climbed after the US FDA approved the company’s glucose monitoring device. The company also won US antitrust approval to buy Alere on condition that it sells two point-of-care medical testing businesses.
In London, Federal Reserve Vice-Chair Stanley Fischer said it was important for the central bank to reverse its massive bond buying program given that it had previously said they were a temporary measure. “The importance of the shift that is now underway, of reducing the size of the Fed’s balance sheet (is that) I think it’s very important that we said these are temporary measures, that they be temporary measures.” Fischer also said he thought the Fed was communicating its policy intentions and its commitment to tighten policy better now than in 2013, when concern about reduced stimulus led to a jump in bond yields known as the ‘taper tantrum’.
The final estimate of second quarter gross domestic product was revised upward to an annualized increase of 3.1 percent. The merchandise trade gap in goods narrowed to $62.9 billion after July’s $63.9 billion. Weekly jobless claims continue to be affected by hurricanes Harvey and Irma. In the latest week, claims were up 12,000 to 272,000.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up 80 US cents to US$1,283.35. Copper futures were up 1.7 percent to US$2.98. WTI spot crude was down 55 US cents to US$51.59. Dated Brent spot crude was down 28 US cents to US$57.62. The US dollar was down against the yen, euro, pound, Swiss franc and the Canadian dollar. The currency was unchanged against the Australian dollar. The Dollar Index was down 0.3 percent. The yield on the US Treasury 30 year bond was up 2 basis points to 2.87 and the 10 year note yield edged up 1 basis point to 2.31 percent.
European markets
Most European stock indices advanced Thursday, trading in a narrow range. Bank stocks were among the top gainers of the session on expectations of Federal Reserve interest rate increases. The FTSE and SMI edged up 0.1 percent while the CAC and DAX added 0.2 percent and 0.4 percent respectively.
The Bank of Spain warned on Thursday that the political tensions surrounding the referendum being held for Catalonia’s independence could hurt economic activity. Catalonia is set to hold the referendum on October 1. In its quarterly report, the Bank said: “Regarding the risks to the growth forecasts, political tensions in Catalonia could possibly affect confidence, spending decisions and financing conditions.”
Deutsche Bank, Barclays and Standard Chartered advanced. Ryanair declined — the airline faces legal action for “persistently misleading” passengers about their rights following the wave of flight cancellations because of a shortage of pilots. Imperial Brands dropped after reports that it is in talks to help save struggling wholesaler Palmer & Harvey Holdings. H&M declined after the company reported a 20 percent fall in quarterly profit Thursday as summer discounts squeezed margins, while sales slowed towards the end of this month. TUI slipped after the travel company said trading since its last update has remained in line with the Group’s expectations.
Hennes & Mauritz sank in Stockholm after the retailer posted weaker-than-expected third-quarter earnings. SGS surged on a broker upgrade. Novartis and Roche advanced along with Aryzta and Vifor Pharma. Swiss Life and Zurich Insurance gained along with Bâloise. UBS was higher but Credit Suisse slipped along with Nestlé. The rise in oil prices spurred by tension around northern Iraq following the Kurdistan region’s vote in favour of independence in a referendum helped European majors such as Total and Royal Dutch Shell close higher.
September Eurozone economic confidence strengthened with the economic sentiment index rising to 113.0 from 111.9 in August. Germany’s inflation remained unchanged at its highest level in four months in September. The preliminary CPI rose 1.8 percent on the year, unchanged with August.
Asia Pacific
Asian stocks ended mixed after South Korea said it expects North Korea to engage in more provocation action next month, to coincide with the anniversary of the founding of its communist party and China’s Communist Party Congress. The US dollar was steady near a one-month high after US President Donald Trump unveiled his long-awaited tax reform plan overnight.
The Shanghai Composite retreated 0.2 percent prior to the upcoming National Day holidays beginning on Sunday. The Hang Seng index was down 0.8 percent.
Japanese shares were higher thanks to gains in the US dollar against the yen. The sliding yen helped lift exporters and financials. The Nikkei was up 0.5 percent and the Topix added 0.7 percent. Tokyo Electron, Isuzu Motors and Dai-ichi Life Holdings rallied. Yamato Holdings advanced on a Nikkei report that the delivery services company is negotiating a higher rate with corporate clients for shipping in Japan. Japanese Prime Minister Shinzo Abe officially dissolved the lower house of the Diet (parliament) and set the flash election for October 22.
Both the S&P/ASX and All Ordinaries were up 0.1 percent after Trump proposed the biggest US tax overhaul in three decades. Banks Commonwealth, NAB and were higher along with miners BHP Billiton, Rio Tinto and Fortescue Metals Group. Origin Energy rose after it agreed to sell its conventional oil and gas exploration business Lattice Energy to Beach Energy for A$1.59 billion. Beach Energy shares entered a trading halt.
The Kospi was virtually unchanged (up 0.57 point) as investors weighed North Korean risks and waited for current account balance data for August, due out Friday. The Sensex rebounded 0.4 percent after falling for seven straight sessions on concerns over geopolitical tensions along with growth and fiscal deficit worries.
Looking forward
Japan releases August household spending, retail sales, industrial production, unemployment and consumer prices data. Germany posts August retail sales and September unemployment. France releases consumption of manufactured goods. The UK posts its final estimate of gross domestic product. The Eurozone reports September flash harmonized index of consumer prices. In the US, August personal income and spending will be released along with final September consumer sentiment.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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