Global Stocks Steady, Eyes on Trump Tax Policy
Volkswagen shares rise on hopes of settlement over emissions scandal
By Riva Gold Updated Jan. 11, 2017 7:00 a.m. ET
Global stocks were steady while the dollar strengthened Wednesday ahead of President-elect Donald Trump’s first news conference of the year.
Futures pointed to a small opening gain for the Dow Jones Industrial Average and a flat opening for the S&P 500, following a 0.2% rise in the Stoxx Europe 600 and a modest climb in Asian markets.
The WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, rose 0.2%, while the 10-year U.S. Treasury yield edged higher to 2.384% from 2.379% in the previous session.
Traders are hoping Mr. Trump’s conference, scheduled for later in the day, will provide further clarity on his plans for fiscal policy. His proposed tax cuts could boost global economic growth this year and next, the World Bank said on Tuesday.
Financial markets are on alert for more clarity on President-elect Donald Trump’s tax policies at a press conference scheduled for Wednesday.
Financial markets are on alert for more clarity on President-elect Donald Trump’s tax policies at a press conference scheduled for Wednesday. Photo: Jabin Botsford/The Washington Post/Getty Images
“The bar is set very high for Trump to deliver,” said Colin Graham, chief investment officer at BNP Paribas Investment Partners, adding “we have to be a little bit careful we’re not being too optimistic about the additional revenue and earnings that will come to corporates.”
Data earlier this week showed small-business optimism rose to its highest since 2004, while U.S. stocks have rallied to record highs on expectations Mr. Trump’s plans would boost the U.S. economy and company earnings.
The dollar has also appreciated over 10% against the yen since the election, while developed market bond yields have risen sharply on expectations for stronger growth, higher inflation and climbing interest rates.
Mr. Graham said he would be watching Mr. Trump’s speech for the balance he strikes between tax cuts and deregulation with things like border taxes on imported goods, which could weigh on profits. The World Bank also warned Tuesday potential gains to growth could be offset if Mr. Trump triggers a trade war with China or Mexico.
The Mexican peso was steady Wednesday after falling nearly 5% from the start of the year.
Elsewhere in stock markets, shares of Volkswagen gained nearly 3% after the car manufacturer said it was nearing a settlement with the U.S. Justice Department in its diesel emissions-cheating scandal.
London’s FTSE 100 index added 0.2%, on track for its 10th consecutive day of record closes and its longest ever streak of record highs, as sterling continued to weaken, boosting shares of exporters. The British pound was last down 0.5% at $1.2126.
Earlier, commodity-linked companies helped send Australian stocks up 0.2% as oil and metals prices rose.
Brent crude oil was last up 0.6% at $53.98 a barrel following a steep two-day decline, while gold rose 0.2% to $1,188.10 an ounce.
Japan’s Nikkei Stock Average inched up 0.3% amid hopes Mr. Trump will focus on asking foreign companies to invest in the U.S., while shares of Japanese companies that had pledged to create or retain U.S. jobs moved higher.
Hong Kong shares added 0.8% in their fifth straight day of gains, while the Shanghai Composite Index fell by the same amount in its biggest decline this year.
The Turkish lira also traded down 1.8% against the dollar, falling to an all-time low, as data showed Turkey’s current-account deficit widened in November.
The currency has been under pressure since the state of emergency called in the aftermath of July’s failed coup attempt, and has weakened further amid a selloff in emerging market currencies since the U.S. election in November.
--Suryatapa Bhattacharya, Yeliz Candemir and Willa Plank contributed to this article.
Write to Riva Gold at
riva.gold@wsj.com