European shares broadly flat to a little lower, amid cautious tone

on Dec 19, 2017

European shares were trading broadly unchanged to mildly negative, around midday Tuesday, as investor caution weighs on major trading decisions.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

Investors were more positive at the market open and followed the global tone higher. However, local news, including disappointing German business sentiment data, also likely weighed.

By 1235 BST, the EUROSTOXX 600 was barely change, but a touch in the red, while the EUROSTOXX 50 was down 0.09%. Regional bourses were also generally a little lower. Both the German DAX and French CAC were around 0.1% down, while the IBEX 35 broke the trend, to rise 0.2%.

US tax reform remains in focus

As has been the case for some time now, the US tax reform Bill, which is currently being discussed, detailed and perfected, is keeping the attention of many investors. In the US and overnight in Asia, investors were more upbeat over the likelihood the Bill would pass into law this year.

However, it appears some uncertainty over whether or not that will happen, appears to be staying the hands of European based investors.

Once the Bill does go through, some analysts expect it could push stock prices even higher.

“There'll be some movement the more likely it becomes,” said Ben Laidler, global equities strategist at HSBC.

“The S&P's done well and that tells you it's not been priced in yet. The tax cuts could add 7% to large cap earnings, double that to small cap earnings,” Laidler added.

German business sentiment weighs

Adding to the cautious investor tone, was news that German business sentiment edged lower in December. The widely watched German Ifo business climate index measure, slipped to 117.2 in December from November’s 117.6.

The data showed that while German businesses were generally positive on the current situation, they were less positive on the future outlook. And it was that outlook for the coming months, that weighed on their overall sentiment.