Tuesday August 30th


Appleā€™s European taxes in focus on Wall Street

Wall Street looked set for an anemic open on Tuesday, with stock-index futures paring gains to turn negative. Economic data due on Tuesday include consumer confidence for August and the Case-Shiller home price index for June. It is important for the U.S. Federal Reserve that consumer confidence remains strong if it wishes to raise interest rates shortly, but the non-farm payrolls data due on Friday will be the more important indicator. The European Commission ordered Ireland to recover up to 13 billion euros ($14 billion), plus interest, in back taxes from Apple on Tuesday. In a long-awaited ruling, the executive arm of the European Union said that Ireland had granted undue tax benefits to Apple. The company has paid a tax rate of less than 1 percent on some of its European sales via of a complex tax structure involving Irish subsidiaries. Apple shares declined by around 2.5 percent in pre-market trading. Companies posting quarterly results on Tuesday included Abercrombie & Fitch, which fell more than 10 percent in the premarket after posting weak same-store sales. Shares of Hershey fell sharply in extended-hours trade after Mondelez said it was walking away from takeover talks, having failed to agree on a price for the chocolate maker. Most Asia markets finished higher on Tuesday, while Japanese shares edged down in a muted reaction to better-than-expected economic data. The benchmark Nikkei 225 closed nearly flat, down 0.07 percent, or 12.13 points, at 16,725.36, while the Topix edged down 0.43 point, or 0.03 percent, to 1,312.81. Both indexes wavered modestly between positive and negative throughout the session. In the rest of Asia, markets mostly rose, with South Korea's Kospi closing up 7.39 points, or 0.36 percent, at 2,039.74. In Australia, the ASX 200 added 9.08 points, or 0.17 percent, to 5,478.30, while Hong Kong's Hang Seng index was up 1.04 percent in late afternoon trade. Chinese mainland shares closed modestly higher, with the Shanghai composite up 6.16 points, or 0.2 percent, at 3,076.19, while the Shenzhen composite finished nearly flat at 2,028.35. Oil futures rose on Tuesday supported by production suspensions in the U.S. Gulf due to an expected tropical storm and speculation that producers meeting in Algeria next month will act to prop up prices. Brent crude futures were trading at $49.54 per barrel at 9:17 a.m. ET (1317 GMT), up 28 cents from the previous close. U.S. West Texas Intermediate (WTI) crude was up 40 cents at $47.38 a barrel. Oil and gas operators in the U.S. Gulf of Mexico have shut production equal to 168,334 barrels-per-day (bpd) of oil and 190 million cubic feet per day of natural gas as a precaution against a tropical storm, the U.S. Bureau of Safety and Environmental Enforcement said on Monday. Gold fell on Tuesday after Federal Reserve officials sounded a hawkish note on interest rates, boosting the dollar, while attention turned to U.S. payrolls data this week for further clues on the pace of rate hikes. Fed Chair Janet Yellen said on Friday the case for higher rates was strengthening, though she gave little clarity on when it would move. Later that day Vice Chair Stanley Fischer suggested a hike was possible as soon as September and on Tuesday he said the U.S. job market was nearly at full strength. Spot gold was down 0.36 percent at $1,318.27 an ounce, while U.S. gold futures for December delivery were down $5.80 an ounce at $1,321.30.