By Riva Gold and Ese Erheriene
-- Bank shares lower
-- Tax plan in focus
-- China trade surplus widens
Moves in global stock markets were muted Wednesday in the absence of major catalysts, with investors largely focused on a handful of corporate results and prospects for a tax overhaul in the U.S.
The Stoxx Europe 600 edged up less than 0.1% shortly after markets opened, following a quiet session in Asia. Futures pointed to a flat opening for the S&P 500 after it snapped a five-day winning streak on Tuesday.
Bank shares continued to lag behind in Europe and Asia on Wednesday after four straight days of declining Treasury yields and a rise in German bund prices. Lower yields tend to hurt lenders' profits, since they earn money on the difference between what they pay on deposits and what they charge to lend money.
Bank shares in Europe have fallen around 3.5% so far this quarter--the worst performing sector. On Wednesday, shares of French lender Crédit Agricole fell 4.2%, leading the sector lower, after its net profit recorded a double digit fall on the year. Dutch bank ABN AMRO Group also fell after it reported an 11% rise in third-quarter net profit.
Yields on 10-year Treasurys were little changed Wednesday at 2.312% from 2.309% Tuesday, while German bund yields edged down to 0.327% from 0.330%. Yields move inversely to prices.
Both Treasury yields and the U.S. dollar have come under modest pressure in recent sessions amid concerns that disagreements could force the GOP to make changes to its tax bill and slow down plans to pass it by year's end.
The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, edged down 0.1%.
A year after the U.S. presidential election, investors have realized that anything related to tax reform will take longer and look different than what was initially discussed, said Jonathan Mackay, investment strategist at Schroders.
"We do see a high probability for a tax cut, but it will probably be different from what we've seen from the Republican plan so far," he added.
Elsewhere in Europe, shares of Tullow Oil rose 3.3% after the independent oil & gas, exploration and production group raised its production guidance. That helped Europe's energy sector brush off a modest decline in crude oil prices, with Brent crude last down 0.1% at $63.55 a barrel after falling 0.9% on Tuesday.
Earlier, Asian stocks were little changed following a lackluster session on Wall Street after many indexes across the region notched multiyear highs on Tuesday.
Hong Kong's Hang Seng Index swung between small gains and losses from a 10-year high with shares of China Literature nearly doubling on their first day of trading amid the global frenzy for technology stocks.
The Tencent Holdings unit, which operates an online library, saw immense interest its initial public offering, with retail investors' orders reaching about 625 times the amount of stock available. The company ultimately raised about $1.1 billion.
China Literature's connection with Tencent also added to the offering's popularity, as the tech giant's stock has more than doubled this year.
"Companies like Tencent are seen as unstoppable," said Joshua Crabb, head of Asian equities at Old Mutual Global Investors. Tencent shares, which have logged five straight record closing highs, were down 0.7% on Wednesday.
China's equity markets inched upward, as margin debt--a proxy for investor risk appetite--rebounded to a 22-month high of 1.01 trillion yuan ($152 billion) on Tuesday, a sign of strong buying interest. The Shanghai Composite Index gained 0.1%.
That came despite lackluster October trade data, with China's export and import volumes contracting from September, reflecting a slight easing of growth in other emerging markets along with weaker domestic demand as a result of slower infrastructure spending.
Elsewhere, Japan's Nikkei Stock Average was down 0.1% after the index jumped 1.7% in the previous session to near-26-year highs.
Saumya Vaishampayan and
contributed to this article.
Write to Riva Gold at [email protected] and Ese Erheriene at [email protected]