Progress in tax reform preparations boost risk appetite - 23.8.2017

US indices rise led by tech stocks

US stocks advanced on Tuesday as investor optimism rekindled on news President Trump’s policy team was making progress with congressional leaders on tax reform plans. The dollar rebounded: the live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.4% to 93.476. The S&P 500 rose 1% settling at 2452.51 led by technology stocks, with ten out of 11 main sectors closing higher. Dow Jones industrial average gained 0.9% closing at 21899.89. The Nasdaq composite index jumped 1.4% to 6297.48.

Investors sold Treasuries, gold and Japanese yen, pressuring prices of these haven assets, causing the rise in Treasury yields. Investor risk appetite was buoyed as news about White House progress with Congress on tax system overhaul revived hopes for fiscal stimulus and accelerated growth.

European markets rebound

European stock indices closed higher on Tuesday helped by gains in mining stocks and renewed optimism about US growth prospects. Both the euro and British Pound fell against the dollar. The Stoxx Europe 600 rose 0.8%. Germany’s DAX 30 jumped 1.4% closing at 12229.34. France’s CAC 40 added 0.9% and UK’s FTSE 100 gained 0.9% to 7381.74. Markets opened 0.3%-0.4% higher today.

Rising metals prices and upbeat corporate reports lifted mining stocks. BHP shares jumped 2.1% after the miner said it’s planning to sell its onshore US oil and gas operations. And its final dividend will be increased threefold. Antofagasta shares rose 2% as the copper miner more than tripled its interim-dividend payment after reporting a sharp rise in half-year earnings. In economic news, markets shrugged off ZEW survey results the economic-expectations index came fell more than expected to 10.0 from 17.5 in July.

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Asian markets down

Asian stock indices are mostly lower today as traders are cautious ahead of central bankers’ conference in Jackson Hole, Wyoming which starts on Thursday. Nikkei rose 0.3% to 19434.64 despite a stronger yen against the dollar. Toshiba shares jumped 4.6% after a report the company is prioritizing talks with Western Digital on the sale of its chip unit. Chinese stocks are lower: the Shanghai Composite Index is 0.1% lower as metals prices declined. Australia’s All Ordinaries Index is down 0.2% despite a continued slide in Australian dollar against the greenback.

Oil lower ahead of US inventory report

Oil futures prices are lower today ahead of the official US inventory report. Expected higher global supply as Libya’s Sharara oil field is restarting and increase in US gasoline inventories despite the peak summer driving season weigh on oil prices. Prices ended higher yesterday after the American Petroleum Institute reported that US crude supplies dropped 1.4 million barrels last week. October Brent crude rose 0.4% to $51.87 a barrel on London’s ICE Futures exchange on Tuesday. Today at 16:30 CET the Energy Information Administration will release US Crude Oil Inventories. Analysts polled by S&P Global Platts expect a decline of 3.7 million barrels in crude inventories.