Markets Round-Up 3rd November 2017.
Stock Markets
In the US the S&P only just managed to close higher overnight after investors digested a few of the details of the tax-reform plan proposed by Republicans. (The Nasdaq ⇓0.02% to 6714.94, the Dow ⇑0.35% to 23,516.26 and the S&P 500 ⇑0.02% to 2,579.85.)
Asian stocks were mixed in holiday-thinned trading as investors digested uninspiring Chinese economic data, Donald Trump’s pick for next Fed chief and a U.S. tax cut plan. (Japanese Nikkei closed 0.0%, Hong Kong Hang Seng ⇑0.30%, The Chinese CSI 300 ⇓0.11%, Taiwan TAIEX ⇑0.11.% Korean Kospi ⇑0.46%, Australian ASX ⇑0.47% and the Indian Nifty ⇑0.28%.)
UK Shares struggled to know what to do after yesterday’s dramatic interest rate rise but found small gains with Industrials and tech leading the way. (The FTSE 100 ⇑0.1% to 7560.4, the FTSE 250 ⇑0.4% to 20,472.4)
European stocks were broadly higher after the release of U.S. tax reform bill as well as the announcement of Jerome Powell as the next Federal Reserve Chair. (Euro Stoxx 50 ⇑0.03%, German Dax ⇑0.28%, French CAC40 ⇑0.14% , Spanish IBEX ⇓0.96% , Italian MIB ⇓0.14%)
Currency
The pound marginally strengthened following yesterdays drop (one pound equals €1.1261 Euros and $1.3073 US Dollars)
Commodities
Gold was steady alongside a lacklustre dollar, ahead of U.S. jobs data expected to provide more clues to the path of monetary policy in the world’s largest economy (Gold – $1269.17.)
Oil Prices rose, nearing their highest levels in more than two years, supported by rising global demand and physical prices and continuing expectations that OPEC and other producing countries will extend a deal to cut output. (Oil – Brent $61.2, WTI $55.0)
Other News
US non-farm payrolls increased by 261,000 in October, according to the Department of Labor. US jobs growth slowed kept up a steady pace last month, prompting some economists to caution about the risks from the fast dwindling amount of slack in the economy, despite still weak wage growth. US non-farm payrolls increased by 261,000 in October, according to the Department of Labor, falling well short of the 313,00 rise which economists had penciled in. However, readings for non-farm payrolls over the prior two months were revised up by a combined 90,000, with September’s loss of -38,000 jobs marked up to show a gain of 18,000 for instance.
UK services growth accelerated more than expected in October, a survey of the country’s largest sector revealed on Friday, though economists were divided on the implications as confidence about future growth remained weak. The IHS Markit/CIPS UK services purchasing managers’ index climbed to 55.6 in October from 53.6 a month earlier, beating the consensus forecast for a fall to 53.3. A PMI reading above 50 indicates growth and the services measure had averaged 53.5 in the third quarter. Including positive manufacturing and construction surveys, the ‘all-sector’ PMI output index for October rose for the first time in six months, up to 55.3 from 53.6 a month before.
China’s private sector expanded at the slowest pace in more than a year in October driven by a further slowdown in manufacturing, survey data from IHS Markit showed. The Caixin composite output index fell to 51.0 in October from 51.4 in September. This was the lowest score since June 2016. Nonetheless, a reading above 50 indicates expansion. Growth in Chinese services activity picked up from September’s 21-month low. The services Purchasing Managers’ Index rose to 51.2 from 50.6 in September. The Caixin PMIs for October showed that the economy had a relatively weak start to the fourth quarter, Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said. However, monetary policy is unlikely to be loosened unless major downside risks emerge.
Republicans have unveiled details of a sweeping tax plan, aimed at slashing rates for businesses and lowering inheritance taxes. The proposal would lower the corporate tax rate from 35% to 20%, while retaining the top individual rate for the wealthiest at 39.6%. For the ‘middle classes’, tax deduction will be doubled. Paul Ryan, the Speaker of the House, also said that filing taxes will be made so easy that it will be possible to do it on a postcard.
Apple’s iPhone sales were up in the company’s fourth quarter to 46.7 million units, the company said Thursday, as it posted record revenue and a quarterly profit that was about 19% above results for the same period last year. Apple said the iPhones it sold included the latest models, the iPhone 8 and 8 Plus, which came out in September. iPhone sales were 2.5% higher than in the same quarter last year. The tech giant reported revenue of £52.6bn, an increase of 12% from the year-earlier period. “We’re happy to report a very strong finish to a great fiscal 2017, with record fourth quarter revenue, year-over-year growth for all our product categories, and our best quarter ever for Services,” Tim Cook, Apple’s chief executive officer, said in a statement.
Smith & Nephew said it now expected its full-year revenue and margin performance to be at the lower end of previous guidance, amid a 3% rise in third-quarter revenue. The medical equipment maker’s revenue rose to $1.15b, largely thanks to 9% growth in emerging markets. Growth in established markets was lower, at 1%, with the U.S. up 2%. “We expect underlying revenue growth for the full year to be at the lower end of our guided range of 3-4%,” the company said.
Centrica has acquired REstore NV, Europe’s leading demand response aggregator, for €70m in cash. REstore – which has its headquarters in Antwerp, Belgium – manages 1.7GW of peak load from a portfolio of industrial and commercial (I&C) customers across Belgium, the UK, France and Germany, generating value for businesses through ancillary services including frequency response and capacity markets. The company’s patents are currently used by over 150 of Europe’s largest energy users, including chemical, steel and food manufacturers.
The Treasury has announced that Class 2 NICs, which were due to be scrapped next April, will now stay in place until 12 months later. The move is expected to save around £200m. Treasury officials said the delay had been caused after “legitimate concerns” were raised that self-employed workers on low incomes would see their pension entitlements and benefits hit. The LITRG said of the Treasury’s move: “This is a welcome announcement that shows the government is listening.”
Tesco’s chief executive has told a court of his “surprise and shock” on learning the company’s profits had been misstated by £246m. David Lewis was told about the issue just weeks after he took up the post at the beginning of September 2014. Mr Lewis has been giving evidence at the trial of former Tesco executives Carl Rogberg, Christopher Bush and John Scouler, who are accused of fraud by abuse of position and false accounting. Mr Lewis said he had had numerous meetings with Mr Bush and one with Mr Scouler, but he was not told of the accounting issue until 19 September.
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