US stocks, dollar mixed before tax details, Fed’s decision

Bloomberg

US stocks erased early gains to trade little changed, while the dollar and Treasuries struggled for direction as investors awaited details of Republican tax cuts and the Federal Reserve’s latest decision. The euro slipped as data showed inflation unexpectedly slowed in the region.
Small caps advanced, while the S&P 500 pared a gain as a torrent of decisions with the potential to move markets loom. President Donald Trump signalled he’ll name a new Fed chair on Thursday. The 10-year Treasury yield held near 2.37 percent, while the greenback was mixed versus major peers. Oil slipped from an eight-week high.
In Europe, Spanish equities outperformed as the government in Madrid won the power struggle against Catalan separatists. European bonds edged lower after data showed the economy appeared to be strengthening. A drop in China’s factory gauge sparked some caution in Asia, with equity benchmarks mixed. Japanese stocks ended the day slightly lower after the Bank of Japan maintained its key policy rate.
China’s official factory gauge fell this month, though the country’s economy continues to defy predictions of a sharper slowdown. The euro-area’s unemployment rate inched lower in September as the economy expanded for an 18th consecutive quarter, but consumer inflation unexpectedly slowed in October, complicating the ECB’s task towards tightening policy.
Meanwhile, investors trying to second-guess monetary policy in the world’s biggest economy remain fixated on the identity of the next Fed chief, with the New York Times reporting Jerome Powell will get the nod. And American tax reform also remains a key theme, with lawmakers said to be considering a phase-in plan. The indictment of former Trump campaign aides in Robert Mueller’s investigation of Russian meddling in the US election, however, may pose a danger to the White House as it tries to push tax cuts through Congress.
The US central bank’s next rate decision is on Wednesday, with economists expecting policy makers to hold rates for now and to increase them at the December meeting. The US October payroll report comes out on Friday. Trump starts an 11-day trip to Asia, his first as president, on Friday. Trade and security issues—particularly North Korea—will probably be in focus. A probable Bank of England rate hike on Thursday will be the first in a decade.
The S&P 500 rose less than one point to 2,573.13 at 10 am in New York. The Stoxx Europe 600 Index increased 0.2 percent to the highest in more than five months. Spain’s IBEX Index gained 0.4 percent to the highest in almost 11 weeks. Japan’s Topix index declined 0.3 percent at the close of trading in Tokyo, while the Nikkei 225 Stock Average was flat. SoftBank declined 4.6 percent. Australia’s S&P/ASX 200 Index fell 0.2 percent. Hong Kong’s Hang Seng Index was steady while the Shanghai Composite Index was up 0.1 percent.