US taxes global momentum

US taxes global momentum

Mike van Dulken and Henry Croft at Accendo Markets commented to clients this morning:

FTSE 100 Index called to open flat at 7325, having found support at 7300 following yesterday’s sell off. The question now is whether this level holds up or is merely a pause amid the bearish flag from recent 7580 highs towards September 7200 lows. Bulls need a break above 7335, bears a retest of 7300. Bullish 7335, Bearish 7295.

Calls for a flat open come after a mixed session in Asia overnight suggested a loss in global momentum as tax reform hopes encountered yet another hurdles. But not before Wall St rallied to fresh highs as heavyweights rallied and tech regained some of its recent lost ground. The GBP remains strong amid Brexit optimism and as the USD slips, a hindrance to UK blue chips, although there is support from oil trading higher following the OPEC/NOPEC agreement.

In corporate news Barclays cuts stake in Barclays Africa (21.9% to 14.9%) to boost capital. RBS to close 259 UK branches, cut 680 jobs, expanding e-banking. Indivior gets FDA approval for Sublocade as first and only once monthly injectable for moderate opioid use disorder. Oaktree Capital sells 67.5M Countryside Properties shares at 340p. Firestone Diamonds books $130M FY 2017 Loss, launches discounted share placing. Bunzl to issue £300m of 2025 notes at 2.25%

US equity markets closed higher across the board on Thursday, with the Dow Jones continuing recent outperformance to close above 24,000 for the first time, being joined at all-time highs by theS&P 500 while the Nasdaq attempts to recover from a broad Tech sector sell-off. The Dow was helped higher by strong gains for heavyweights Boeing, Goldman Sachs and United Technologies, while Industrials and IT led the S&P. Large cap Tech stocks such as Amazon, Apple and Facebook rebounded to aid the Nasdaq.

Despite OPEC and non-OPEC producers, most notably Russia, agreeing to extend their output cut production through until the end of 2018, Crude Oil prices are little changed. Speculation that Nigeria and Libya would join the latest round of cuts proved unfounded, perhaps providing a reason that both Brent and US crude remain a distance from recent highs.

Gold has retreated from overnight highs, having rallied to highs of $1276 after the US Senate tax reform plans faced further hurdles. The precious metal, however, remains in a tight range, having not traded below $1274 or above $1276 overnight.

In focus today will be Eurozone PMI Manufacturing (8-9.30am) prints for November, which are forecast to show improvements for Spain and Italy, and confirm higher readings for France, Germany and the Eurozone. The UK may be the outlier, with only a modest rise, albeit still growing strongly.

This afternoon, in contrast, US PMI Manufacturing (2.45pm) is forecast lower for last month, along with ISM Manufacturing (3pm), although the latter may show continued improvement of its employment component but an easing in terms of inflationary (prices paid).

Speakers of note are exclusively from the US Federal Reserve today, with the St. Louis Fed’s Bullard (2:05pm)  giving a presentation on the U.S. Economy and Monetary Policy, the Dallas Fed’s Kaplan (2:30pm) takes part in a moderated Q&A session an entrepreneurial conference in Texas and the Philly Fed’s Harker (3:15pm) discusses ‘Inclusive Economic Growth’ at a policy forum in the City of Brotherly Love.

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