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Market News Update, 26 April

 

 

 

  •  World stocks hit record high
  • Now there´s optimism on earnings, political stability?
  • Trump  Tax cut will send S&P to record highs.

 

President Donald Trump on Wednesday is planning to unveil a proposal to cut corporate taxes on U.S. companies’ foreign profits and to slash the top tax rate on so-called pass-through businesses, including many owner-operated companies, to 15% from 39.6%, said White House officials familiar with the planning says the WSJ

European shares and U.S. stock futures little changed ahead of Trump’s big unveil of his much anticipated tax cut plan as investors seek new impetus for a relief rally. And, if as some traders expect, the rally is likely to be reignited no matter what Trump announces today.

 

the MSCI world equity index, which tracks shares in 46 countries, was up 0.1% to a fresh record high. It is up nearly 2% this week and 8.35% since the start of the year.
The All-World, a nationally diverse index containing 3,087 stocks delivering a total market capitalisation of more than $51tn, is up 8.2 per cent for the year, with investors citing a number of factors behind its latest rally.

US-listed stocks make up 52 per cent of the global barometer, so Wall Street’s move back towards record levels is driving the charge — and lifting sentiment worldwide in the process.

 

European shares pulled back slightly from 20-month highs as some disappointing corporate results weighed on the market but Asian stocks powered ahead.

 

  • Trading in Bonds, Commodities Highlights Skepticism
    Investors brace for faster growth that could lead to inflation that would erode the value of fixed-bond payments.
  • U.S. stocks are roaring again, with the Nasdaq Composite Index reaching 6000 for first time on Tuesday.
  • many analysts warn that bond and commodities markets are sending less-upbeat signals.
  • The yield on the benchmark 10-year Treasury note rose Tuesday
  • But at 2.330%, the yield was below both its 2017 high above 2.6%, reached in mid-March, and its year-end level of 2.446%.
  • Traders often view lower yields as a sign of lower economic-growth expectations.
  • Along the same lines, U.S. crude-oil prices are down nearly 8% this year to $49.56 a barrel Tuesday. The Bloomberg Commodity Index sank to the lowest level this year Monday.
  • An inflation reading in the bond market known as the 10-year break-even rate, reflecting expected annual inflation over that period, last week fell to the lowest since November.
  • These factors have dented investors’ demand for Treasury inflation-protected securities, or TIPS, a popular vehicle to bet on higher inflation.
  • Investors pulled out a net $66.3 million in cash from U.S. bond mutual funds and exchange-traded funds targeting TIPS for the week that ended April 19, according to fund tracker Lipper.
  • It marked the first weekly redemption for the sector since Dec. 7, 2016, and the biggest one-week outflow since October 2016, before the U.S. election.

 

  • In China  markets offer further mixed signals. On Monday, Chinese stocks and bonds declined even as equity markets in many other countries rallied following the first round of the French presidential race. Many commodities traded in China, such as iron ore, nickel, tin, zinc and copper, have fallen over the past weeks.
  • The sign of tightening along with regulators’ signals to curb excessive leverage in markets have raised some angst on whether China would pull away from credit expansion—which has played a big role in keeping the economy humming above 6% annual growth lately.

 

 

What to Watch:

  • The Bank of Japan is widely expected to keep the settings on its monetary easing program unchanged at the end of a two-day policy meeting on Thursday. Though inflation remains well below the central bank’s 2 percent target, it’s ticking up.
  • The ECB sets monetary policy later that same day. With officials indicating little chance of a policy change, the focus will be on any signals from President Mario Draghi that the central bank is debating an exit from its extraordinary stimulus.
  • U.S. GDP is due at the end of the week. It’s projected to show the economy expanded at a 1.0 percent annualized rate in the first quarter, the weakest pace in a year.

Here are the main moves in markets:

Currencies 

  • The Bloomberg Dollar Spot Index increased 0.2 percent as of 7 a.m. in New York, climbing for a second day after a 0.5 percent drop on Monday.
  • The yen was little changed at 111.15 per dollar, after dropping 1.2 percent on Tuesday.
  • The euro lost 0.4 percent to $1.0887, after four straight days of gains.
  • The ruble weakened 0.7 percent after President Vladimir Putin said the government is looking for “market-based measures” to stabilize the currency.

Stocks

  • The Stoxx Europe 600 Index rose 0.1 percent, after a five-day rally to the highest since August 2015.
  • Japan’s Topix index rose 1.2 percent, climbing for a fifth straight day for the longest winning streak this year.
  • Futures on the S&P 500 Index were flat after the underlying gauge climbed 0.6 percent on Tuesday, to within 10 points of its closing record.

Commodities

  • Gold rose 0.1 percent to $1,265.21, after dropping 1 percent on Tuesday as investors turn attention to Trump’s agenda to boost U.S. growth.
  • Crude resumed declines, losing 0.4 percent to $49.38 per barrel, after halting a six-day selloff on Tuesday.

Bonds

  • The yield on 10-year Treasuries fell one basis point to 2.32 percent, after climbing for five straight sessions.
  • German government debt with a similar maturity saw yields fell one basis point to 0.37 percent.
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