Main topics of the day in Europe: tax reform in the United States, the resumption of negotiations on Brexit, correction in the oil market



Leading stock indexes of Europe on Monday grow, supported by the passage in the U.S. Senate bill on large-scale tax reform, which was one of the main election promises of President Donald trump.

In the night from Saturday to Sunday after a long debate, us senators took the initiative for the Republicans by a narrow margin of votes – 51 to 49. None of the democratic senators for the bill didn’t vote. However, many corrections were made by hand in the absence of the final version of the document.

The main provision of the reform is to reduce corporate tax from 35 to 20%, which will improve the competitiveness of American companies in the global economy. This proposal coincides with the version of the document, adopted earlier by the lower house of Congress. However, on many other issues (including tax scale for US citizens) there are significant differences. Many experts have criticized the current bill for the lack of proposals on minimization of risks of increase of the US debt, which is forecast to increase by $ 1 trillion as a result of implementation of the tax reform.

In the near future to both houses of Parliament have to overcome differences and develop a single document, which will then be put to a vote again. Republicans hope that a deal will be reached by Christmas.

By 14:50 GMT the pan-European Stoxx Europe 600 index rose by 1.0% in comparison with level of Friday’s close amid the British FTSE-100 index by 0.5%, the German DAX down 1.3 PCT, France’s CAC 40 down 1.1%.

Asian stock markets on Monday closed mixed. Futures on American stock indices grow by 0.5 – 0.9%, reacting to news from Washington.

Leaders improve in Europe were shares of automakers that receive a significant share of income in the American market. Autosector index rose more than 1%.

Shares of the largest Danish insurance company Tryg has risen by 3.8% after reports of buying competing company Alka Forsikring for 1.31 billion.

The shares of a German manufacturer of microprocessors Dialog Semiconductor fell more than 19% after the news that one of the key customers Dialog Semiconductor company Apple intends to build its own plant for the production of similar products. Guide Dialog Semiconductor has tried to reassure shareholders, saying that at least in the next year cooperation with Apple will continue.

Among the political news of Europe today expect the resumption of negotiations on Brexit. On the agenda are three issues: size of the British payments, rights of expatriates, the border between the UK and the European Union. Earlier, Prime Minister Theresa may has been asked to December 4 to consider the specific conditions of “divorce”. Reuters today quoted several representatives of the EU, announced its “more optimistic” mood. However, they did not rule out the emergence of new divisions and the latest delay of the negotiations. According to previously submitted plans UK exit from the EU is supposed to happen on 29 March 2019 23:00 London time.

Oil prices on Monday decreased 1%, correctives after the rally at the end of last week, which was provoked by the message on the extension of the agreement OPEC+ to reduce oil production. During the 30 November meeting in Vienna, OPEC’s 14 members and 10 other oil producers, including Russia, have decided to extend valid until March 2018 the agreement for an additional nine months – until the end of 2018.

Under the agreement, the reduction of oil production determined on the level of 1.8 million barrels. per day, of which 1.2 million barrels. have members of OPEC. The contribution of Russia to reduce oil production – 300 thousand barrels per day (a decrease of approximately 3%). As a starting point to determine the level of reduction was adopted, the volume of production in October 2016. The new agreement does not include changes in production volumes, quotas, parties are left unchanged and will be revised or confirmed every two to three months.

OPEC’s decision regarding the extension of the agreement was expected for the markets, but the obligation of Libya and Nigeria, not to increase production and keep their level of 2017 (2.8 million barrels. per day) was a pleasant surprise. Previously, these States did not participate in the agreement. At the end of the trading day on Friday, prices for Brent oil increased by 1.8%, despite a downward correction to close.

The decline in oil prices in late trading on Friday was provoked by the message of the company, Baker Hughes growth in the number of operating drilling rigs for the extraction of shale oil in the United States last week in 2 to 749 PCs. (up to September). The total number of active drilling rigs in U.S. shale oil and natural gas last week rose to 6 929 units, which was 332 PCs more than in the same period in 2016.

Thus, the pressure on the market continue to have concerns expansion of production of shale oil in the United States that could undermine the efforts of OPEC and partners on the balancing of supply and demand in the oil market. To the present moment the cost of the February contract for Brent crude decreased 0.7% from Friday’s close, reaching 63.2 $ per barrel.

Prepared using materials MarketWatch and CNBC.




Main topics of the day in Europe: tax reform in the United States, the resumption of negotiations on Brexit, correction in the oil market 04.12.2017

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