Tuesday: 5th December 2017 – U.S. Technology Stocks Dropped

• Wall Street indexes have cruised to record highs, with optimism about a Republican plan to slash corporate taxes fuelling gains in banks, while Microsoft and other technology stocks dropped.
• Bank of America, JPMorgan Chase, Wells Fargo & Co, and Citigroup jumped more than two percent after the US Senate approved its tax bill on Saturday.
• Once the Senate and House of Representatives reconcile their respective versions of the legislation, the resulting bill could cut corporate tax rates to 20 percent from 35 percent.
• Investors freed up money to buy banks and other stocks seen as benefiting from lower taxes by selling technology stocks, which have become relatively expensive after leading the market’s gains this year.
• Microsoft lost 2.5 percent, Nvidia slumped 4.1 percent and Paypal Holdings fell five percent, pushing the Nasdaq into negative territory.
• Also lifting financial stocks was the broad expectation that the Federal Reserve will increase interest rates in December, which makes bank lending more profitable.
• In late afternoon trading, the Dow and S&P500 had slipped off their session highs while the Nasdaq had deepened its fall.
• The Dow Jones Industrial Average was up 0.59 percent at 24,373.54 points, while the S&P 500 had gained 0.23 percent to 2,648.38. Both hit intra-day record highs.
• The Nasdaq Composite dropped 0.67 percent to 6,801.56.

• Gold prices fell, weighed down by a resurgent dollar after the Senate passed its version of a tax-overhaul bill over the weekend.
• Gold for February delivery fell 0.4% to $1,277.70 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices rose Friday after ABC reported that former national security adviser Michael Flynn was prepared to testify that President Donald Trump, as a candidate, “directed him to make contact with the Russians.”
• Among base metals, copper for March delivery swung between small gains and losses and closed down 0.1% at $3.0900 a pound. The industrial metal has pulled back from nearly three-year highs recently with some investors anxious that demand from China, the world’s largest metals consumer, will slow moving forward. Still, prices are up more than 20% for the year and many analysts expect future supply deficits to buoy the red metal.
• IRON ORE: $70.48 +0.67( January contract )

• Oil prices settled lower for the first time in three sessions. A second-straight weekly rise in the number of active U.S. oil-drilling rigs, reported by Baker Hughes last week, fed concerns over rising U.S. crude production, offsetting support from OPEC’s decision last week to extend its output-cut deal with other major producers to the end of next year.
• January West Texas Intermediate oil lost 89 cents, or 1.5%, to settle at $57.47 a barrel on the New York Mercantile Exchange.

• The dollar rose, after the Senate passed a tax overhaul over the weekend.
• The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.3% at 86.76.
• President Donald Trump has said the tax cuts will boost the economy, and some analysts believe they could spur the Federal Reserve to raise rates at a faster pace. Expectations of higher rates tend to boost the dollar, as they make the U.S. currency more attractive to yield-seeking investors.
• Lawmakers will attempt to push a final bill to the White House before Christmas, as the House and Senate try to reconcile competing versions of the plan.
• Any indication that the process could be delayed or that the final package will be watered down could undermine the dollar, analysts at Commonwealth Foreign Exchange said in a note to investors.

AUSTRALIAN DOLLAR:

• The Australian dollar is steady against a stronger greenback which lifted following the US tax reform bill’s passage through the Senate.
• At 0635 AEDT on Tuesday, the Australian dollar was worth 75.97 US cents, unchanged from Monday.

• The UK’s top share index rose from a two-month low on Monday but lagged behind European peers in a broader rally sparked by progress in US tax reforms, as Britain and the EU failed to strike a deal on an initial Brexit divorce package.
• The blue-chip FTSE 100 index closed 0.53 percent higher at 7,338.97 points, a modest performance in comparison with France’s CAC 40 and Germany’s DAX, which were up 1.3 percent and 1.53 percent respectively, with the Frankfurt bourse ending at 13,058.55.
• British Prime Minister Theresa May failed to strike a Brexit divorce deal with EU negotiators in Brussels despite earlier reports of a breakthrough agreement that would have kept British-ruled Northern Ireland aligned with EU regulations.

• Most major Asian indexes also got a lift from the US tax bill’s passage through the Senate.
• MSCI’s Asia ex-Japan stock index was firmer by 0.36 percent.
• Japan’s Nikkei index closed down 0.49 percent at 22,707.16.
• Hong Kong shares rose slightly, led by index heavyweight Tencent.
• The Hang Seng index rose 0.22 percent to 29,138.28, while the Hang Seng China Enterprises index rose 0.6 percent to 11,518.07.
• China’s main Shanghai Composite index closed down 0.24 percent at 3,309,62 points while its blue-chip CSI300 index ended up 0.52 percent at 4,018.86.
• The S&P/NZX 50 Index slipped 0.05 percent, to 8,184.87.