October 31, 2017
Russia probe rattles U.S., all calm in Catalonia, and euro-area inflation slows. Here are some of the things people in markets are talking about today.
Markets are caught between the latest fallout from the Russia election probe and imminent announcements on U.S. tax reform and the outlook for monetary policy. The Ways and Means panel is set to release the text of its tax bill on Wednesday, which may include a phase-in plan for corporate tax cuts. President Donald Trump said he will announce his choice for the next Federal Reserve chair on Thursday, before he departs for a trip to Asia. The New York Times reported Jerome Powell will be chosen, in line with expectations from betting markets. Meanwhile, the first charges unsealed in Special Counsel Robert Mueller’s probe of the presidential election suggest he’s building a case that Trump’s campaign was in close touch with Russian officials who aimed to defeat Hillary Clinton.
Political risk deflated in Europe as Catalan leader Carles Puigdemont fled to Belgium, leaving the independence movement struggling for a way forward as Spain seized control of the region’s government. Party leaders understand that Puigdemont — who faces rebellion charges that could put him in jail for 30 years — plans to seek asylum. Investors are now turning their attention back to the economy, with a raft of data due from Europe this week.
BNP Paribas SA joined a growing list of banks whose earnings have been dragged down by a slump in trading revenue. Income from trading bonds, currencies and commodities at the Paris-based lender fell 26 percent from a year earlier. In other earnings-season news, Airbus SE reported a 4 percent decline in third-quarter profit and BP Plc signaled growing confidence the oil industry downturn is coming to an end by starting to buy back shares issued to partially cover its dividend during the price slump.
Overnight in Asia the MSCI Asia Pacific Index and the yen were little changed, while Japanese stocks retreated 0.3 percent after the Bank of Japan maintained its key policy rate and target for the yield on 10-year government bonds, while showing concerns remain on the inflation outlook. In Europe, the Stoxx 600 Index was 0.2 percent higher at 5:43 a.m. Eastern Time. S&P 500 futures added 0.2 percent, the 10-year Treasury yield was at 2.376 percent and gold was little changed.
Euro-area inflation unexpectedly slowed in October despite the bloc’s strengthening economy, underscoring why the European Central Bank kept its exit from monetary stimulus wide open. The data was published alongside third-quarter gross domestic product figures, which showed faster-than-forecast growth of 0.6 percent, an 18th quarterly expansion.