Morning Message

Mid-Week Update

Wednesday 5th April 2017

European shares gained slightly this morning as oil prices and deals boosted energy stocks. The ESTX 50 (-0.06%) and the Dax (-0.24%) were slightly negative in early trading, while the UK markets (+0.17%) and the CAC 40 (+0.01%) were positive. Wood Group and Amec Foster Wheeler were up +3% and +2.7% respectively, after Wood Group said it expected about 36% more cost savings from its deal to buy Amec for £2.2 billion. BHP Billiton was up +2.9% after it became the fourth miner to declare force majeure on Australian coal mines disrupted by Cyclone Debbie, pushing up coking coal futures. JCDecaux dropped -3.6% after JPMorgan cut its shares to “neutral” from “overweight”, saying contract losses such as the Velib Paris bicycles contract, and a slow recovery to profitability for major contracts suggested limited earnings upside.

US stocks were little changed as investors stayed on the sidelines ahead of the first quarter earnings season and fretted over the ability of President Trump to deliver on his policy plans. The Dow Jones Industrial Average (+0.19%), S&P 500 (+0.06%) and the Nasdaq Composite (+0.07%) all increased. The market moved off session lows after Trump said a proposed US infrastructure bill may top $1 trillion and that his administration was working on a major haircut on Dodd-Frank banking regulation. The comments helped industrial and material stocks. Caterpillar gained +2%. Ralph Lauren fell -4.8% after saying it was shutting its flagship Fifth Avenue store in New York and cutting jobs. Nordstrom Inc was down -5.2%, L Brands Inc was down -4.4% and Kohl’s Corp lost -3.5%.

Asian shares were mostly positive, after brushing off a North Korean ballistic test ahead of an upcoming meeting between President Trump and the Chinese President. The Nikkei 225 (+0.27%), Hang Seng (+0.57%) and the S&P/ASX 200 (+0.34%) all posted gains. It was reported that North Korea launched a medium range ballistic missile from a land based facility, ahead of a summit between US and Chinese leaders tomorrow and Friday. Asian banks were mostly lower. Major Japanese banks declined, with Mitsubishi UFJ and Mizuho Financial both lower by -0.95%. Chinese banks were mixed, with Bank of China lower by -0.54%, but China Construction Bank was higher by +1.01%.

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