Europe open: Stocks start higher, CPI data, US tax reforms in focus


Europe open: Stocks start higher, CPI data, US tax reforms in focus

Wed, 13 September 2017
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(ShareCast News) - European stocks have begun the session moving slightly higher as investors digest the latest batch of consumer price data from around the world, with a view to determining what the impact might be on central bank policy.
In the background, there was keen interest on the news-flow surrounding the possibility of tax reforms in the States, with strategists at Citi and Bank of America-Merrill Lynch having recently identified it as a key factor affecting the outlook for government bond yields in the US.

Indeed, according to analysts the previous day's gains for stocks in Wall Street were helped by just such a prospect.

"The positive momentum was also helped by comments from US Treasury Secretary Steve Mnuchin that the US administration was still looking to get some measure of tax reform in place by year end, while there was chatter that Congress was looking at a compromise reduction from the current 35% corporate tax rate to a rate of 23%," said Michael Hewson, chief market analyst at CMC Markets UK.

Overnight, US Treasury Secretary Steve Mnuchin indicated at a conference hosted by CNBC and Institutional Investor that he expected tax reforms to be in place before the current year was out and that they might be made retroactive to 1 January.

Linked to all of the above - particularly for the extremely short-term trading outlook - would be employment data due out later in the morning in the UK amd producer price figures Stateside (with US CPI data due on Thursday).

Geopolitical news was also in focus on Wednesday, after Mnuchin told assistants at the same event that his country would respond if China did not abide by the sanctions which had been approved the day before against North Korea.

For its part, according to North Korea's KCNA news agency, "the DPRK will redouble the efforts to increase its strength to safeguard the country's sovereignty and right to existence and to preserve peace and security of the region by establishing the practical equilibrium with the US."

Back in all things Eurozone, German consumer price inflation advanced at a 1.8% year-on-year pace last month, in-line with a preliminary reading released on 30 August, according to the Ministry of Finance.

August's increase in the cost of living in Spain was confirmed by the country's statistics office at 2.0% year-on-year for the harmonised CPI.

The rate of growth in euro area employment ticked lower in the second quarter of 2017 from 0.5% for the first three months of the year to 0.4%.

On the calendar for later in the session, euro area industrial production data are set for release at 1000 BST, with US factory gate price data for August scheduled for 1330 BST, followed by the latest Treasury budget figures at 1900 BST.

The Porsche and Piech families, which combined owned Germany's Volkswagen, reportedly voiced opposition against selling any of the company's assets.

On a related note, in France PSA Group's boss reportedly said the fate of 800 staff at Opel's engine testing facility were at the mercy of European policymakers due to the regulatory push in favour of electric vehicles.

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