Global markets have steadier tone after Wall Street recovery

LONDON – European stock markets traded in fairly narrow ranges Tuesday following a late recovery on Wall Street at the end of a session that had been dominated by concerns over the ability of the Trump administration to deliver on its economic and tax plans following its defeat on health care reform.

KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was flat at 7,292 while the CAC 40 in France fell 0.1 per cent to 5,011. Germany’s DAX outperformed its peers somewhat, trading 0.5 per cent higher at 12,052. U.S. stocks were poised for modest declines at the open with Dow futures and the broader S&P futures down 0.1 per cent.

US FOCUS: The stock market had been on a nearly nonstop rip higher since last November’s general election on the belief that President Donald Trump and a Republican-led Congress will cut income taxes, loosen regulations for companies and institute other business-friendly policies. But last week’s failure by Republicans to fulfil a pledge they’ve been making for years, to repeal the Affordable Care Act, raises doubts that Washington can push through other promises. That prompted further weakness in stocks and the dollar, too.

ANALYST TAKE: “A lack of news flow continues to bedevil this market, but the rebound off the lows for Wall Street indicates that there is still plenty of buying pressure out there,” said Chris Beauchamp, chief market analyst at IG.

BREXIT DAY: Investors, particularly in U.K.-related assets, will have more to chew on Wednesday when the British government finally triggers the two-year process by which it leaves the European Union. Details of the letter have been a closely guarded secret. There’s uncertainty about how much detail the government will get into with regard to its negotiating position. The pound has been pressured since last June’s Brexit vote, falling by around 20 per cent against the dollar. It’s currently trading at $1.255.

THE QUOTE: “If anything the act of triggering Article 50 could be one of those ‘sell the rumour, buy the fact’ type of trades that has the potential to drive the pound up towards its recent highs and towards the $1.30 area where it was prior to the recent Bank of England rate cut in August,” said Michael Hewson, chief market analyst at CMC Markets.

ASIA’S DAY: Tokyo’s Nikkei 225 gained 1.1 per cent to 19,202.87 and Sydney’s S&P ASX 200 advanced 1.3 per cent to 5,821.20. Hong Kong’s Hang Seng added 0.5 per cent to 24,314.98 while the Shanghai Composite Index shed 0.4 per cent to 3,252.95. Seoul’s Kospi rose 0.3 per cent to 2,163.31 and India’s Sensex gained 0.6 per cent to 29,401.84.

ENERGY: Benchmark U.S. crude gained 54 cents to $48.27 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price international oils, rose 56 cents to $51.46 in London.

CURRENCIES: The euro was down 0.1 per cent at $1.0858 while the dollar fell 0.3 per cent to 110.28 yen.