WEEKEND WEB: US decision to delay tax cuts slow markets

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Our weekly report on the global finance makrket from SCOTT WOODS.

Global shares retreated from historic highs last week, paring gains in the last few days on news that the US Senate would delay any plans to reduce US corporate taxes until 2019. (Lower taxes typically increase profits growth). European shares fell, as did eurozone bond prices, with bond yields moving higher (yields move inversely to prices). This was on the news that the European Commission had lowered its inflation outlook, despite being optimistic on growth prospects for the eurozone (but not the UK; citing Brexit uncertainties). Japanese shares retreated from multi-decade highs, although ended the week in positive territory, as did Asian shares.

UK retail sales stuttered in October as non-food sales endured their toughest month in more than five years, according to the British Retail Consortium, citing consumers favouring outdoor experiences over shopping trips during the school half-term period.

Retail giant Marks & Spencer is a particularly high-profile casualty; despite quadrupling its half-yearly profits, the bellwether of the UK retail sector is experiencing ongoing struggles in its high-end food and clothing businesses. By contrast, retail sales in the

eurozone are growing at their fastest rate in more than two years, according to Eurostat, reflecting improving economic conditions on the continent.

Oil prices rose sharply as Saudi Arabia’s heir apparent, Prince Mohammad bin Salman, coordinated the arrest of several princes and ministers. The crackdown was variously described as an anti-corruption drive, or as a consolidation of power by the 32-year old, who in June was appointed crown prince by his father King Salman. Political turmoil in Saudi Arabia, which vies with Russia as the world’s largest oil producer, is often associated with a price rise. The crown prince is thought likely to uphold OPEC agreements on production cuts. Brent crude oil topped US$65 per barrel, its highest level since June 2015.

Source of information Old Mutual Global Investors (OMGI).

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