Global stocks little changed
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-- European bank shares under pressure
-- Snap shares pare losses in premarket trading
Global stocks edged lower in muted trading Wednesday, with investors largely focused on a handful of corporate results and prospects for a U.S. tax overhaul.
The Stoxx Europe 600 was off 0.2% after a quiet session in Asia, while futures pointed to 0.1% opening loss for the S&P 500 after it broke a five-day winning streak on Tuesday.
Shares of Snap fell 20% in after-hours trading Tuesday as its quarterly results fell short of expectations, but the company pared losses premarket after it disclosed that Chinese tech giant Tencent Holdings bought a 12% stake. Shares were down 10%.
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In Europe and Asia, bank shares continued to lag behind, hit by mixed third-quarter earnings and a shrinking gap between short and long-dated bond yields. European lenders were off 0.4% on Wednesday after a downbeat report from France's Crédit Agricole. The sector is down 3.3% so far this quarter -- the worst performing group in the region.
More broadly, lower long-term government bond yields and a flatter yield curve tend to hurt lenders' profits, since banks earn money on the difference between what they pay on deposits and what they charge to lend money.
The U.S. yield curve, or the gap between two and 10-year Treasury yields, is now at its flattest since 2007, according to strategists at Deutsche Bank. The yield on the 10-year U.S. Treasury note was up slightly at 2.314% Wednesday, according to Tradeweb, from 2.309% Tuesday. Yields rise as bond prices fall.
Long-dated bond yields 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 the year's end.
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.
He expects small-cap U.S. stocks to benefit most from any changes to the tax code since they pay a higher effective tax rate. The Russell 2000 index of small-cap stocks has risen about 24% in the 12 months since the November 2016 election, compared with a 21% gain for the S&P 500.
Earlier Wednesday, Asian stocks were little changed after many indexes across the region notched multiyear records on Tuesday.
Japan's Nikkei Stock Average edged down 0.1% from a near 26-year high. Shanghai stocks inched up less than 0.1% despite lackluster October trade data, with China's export and import volumes contracting from September.
Hong Kong's Hang Seng Index shed 0.3%, but shares of China Literature nearly doubled on their first day of trading amid the global frenzy for technology stocks.
Saumya Vaishampayan and Ben Collins contributed to this article.
Write to Riva Gold at firstname.lastname@example.org
(END) Dow Jones Newswires
November 08, 2017 09:37 ET (14:37 GMT)