Portfolio

Europe close: Stocks end at session-highs, US tax cuts in focus

By Alexander Bueso

Date: Monday 18 Dec 2017

Europe close: Stocks end at session-highs, US tax cuts in focus

(ShareCast News) - Stocks in the single currency bloc finished the session sharply higher even as traders began heading off on their holidays with investors digesting a weekend full of political news, amid a heavy mergers and acquisitions-related news-flow.
By the closing bell, the benchmark Stoxx 600 was higher by 1.15% or 4.47 points to 392.66, alongside a gain of 1.59% or 208.74 to 13,312.30 for the Dax and a rise of 1.33% or 71.28 points to 5,420.58 on the Cac-40.

"Equities have extended Friday's gains, buoyed by fresh optimism that President Trump will indeed get through the much anticipated tax reform before year-end and yet more M&A/corporate transactions (Unilever, 3i, Statoil, Vonovia, Thales, Oracle). Even a rebound for GBP and EUR isn't spoiling the bullish fun for this last full week before the Christmas break," said Mike van Dulken at Accendo Markets.

Last Friday evening, news broke that US Congressmen were tweaking their tax cut proposals in order to gain backing from hold-outs within their own ranks, including Marco Rubio, Bob Corker, Mike Lee and Susan Collins, and at the start of the week it appeared they had won over at least two of those, if not all.

Back in Europe, Chancellor Angela Merkel said on Sunday she would not allow coalition talks in Germany to hinder plans to begin exploring ways in March to reform the Eurozone.

Also at the weekend, Austria's centre-right OVP party inked a coalition deal with the right-wing FPO. On the coalition's agenda were €12bn in tax cuts - equal to 3% of the central European country's GDP - to be financed via spending cuts and efficiency gains.

The coalition also committed itself to Austria's continued membership of the European Union, leaving the door open as well to deeper integration.

On the economic front, Eurostat confirmed euro area consumer prices at down by 0.1% month-on-month for November and at up by 1.5% year-on-year, confirming a preliminary estimate.

Elsewhere, consumer confidence in Belgium dipped in December as subindices tracking the economic situation and the outlook for joblessness in the country fell back.

The Belgian central bank's consumer confidence gauge slipped for a second consecutive month, albeit only marginally so, from a reading of 3.0 for November to 2.0 in December.

In the corporate space, shares of Gemalto pushed higher after the cyber-risk specialist accepted a €4.76bn buy-out bid from Thales, having rejected a rival offer from Atos the week before.

Shares in Germany's Vonovia also gained, even after offering €5.2bn in cash for Austrian property company rival Buwog AG.

Stock in Unilever on the other hand was slipping despite news that it had agreed to sell its spreads business to private equity outfit KKR for $8.1bn.



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