European Close Market Briefing – 05/06/2017 – by Arjun Lakhanpal

In European Equity Markets stocks fell on Monday as energy stocks dragged and banks were led lower by Spain’s Banco Popular on concerns that it could be wound down. The pan-European STOXX 600 index fell 0.1 percent, with activity reduced by a public holiday in the region, while Britain’s FTSE which hit a fresh record high on Friday, fell 0.3 percent. Banks were the biggest drag to the STOXX index with Banco Popular falling as much as 18 percent to fresh record lows on worries that it could be wound down if it does not find a buyer.  European travel and leisure stocks fell 0.8 percent, the worst-performing across sectors. The German and some other European stock markets were closed for a public holiday, reducing overall activity.

In Currency Markets the U.S. dollar rebounded from a near seven-month low against the euro on Monday as traders doubted that any ECB shift in policy stance could strengthen the euro further, while dollar repurchases after Friday’s steep losses also helped the greenback. The euro was last down 0.3 percent against the dollar at $1.1252 after hitting $1.1285 on Friday. Against the Japanese yen, the dollar was flat at 110.41 yen.  Sterling was last up 0.3 percent against the dollar at $1.2921. The dollar hit a near seven-month low against the Mexican peso of 18.3325 pesos after the ruling Institutional Revolutionary Party (PRI) fended of a leftist challenge in a key state election, seen as a prelude to next year’s presidential elections.

In Commodities Markets oil prices fell about 1 percent on Monday on concerns that the cutting of ties with Qatar by top crude exporter Saudi Arabia and other Arab states could hamper a global deal to reduce oil production. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain closed transport links with top liquefied natural gas (LNG) and condensate shipper Qatar, accusing it of supporting extremism and undermining regional stability. Brent futures were down 1.12 percent at $49.37 a barrel. U.S. West Texas Intermediate futures were at $47.15 a barrel, down 1.1 percent. Spot gold was steady at $1,280.31 per ounce. Silver hit a high of $17.61 an ounce, its strongest since April 26. Platinum eased 0.3 percent to $955.70.

In US Equity Markets stocks were slightly lower in late morning trading on Monday as Apple dragged down all the three major indexes following a rating cut and ahead of its developer conference. The Dow Jones Industrial Average was down 0.01 percent, at 21,204.96 and the S&P 500 was down 0.05 percent, at 2,437.66. The Nasdaq Composite was down 0.07 percent, at 6,301.52. The iPhone maker’s stock was down 0.80 percent after brokerage Pacific Crest downgraded it to “sector weight” from “overweight”. Alphabet hit the $1,000 mark and provided the second biggest boost to the S&P and Nasdaq. Herbalife was down 6.2 percent after the nutritional supplement maker lowered its sales outlook for the current quarter.

In Bond Markets  U.S. Treasury debt prices fell on Monday in thin trading, as investors booked profits after gains the previous session on a U.S. employment report that underwhelmed expectations and suggested a more cautious Federal Reserve policy beyond June.  In mid-morning trading, U.S. 10-year Treasuries were last down 4/32 in price, with yields at 2.173 from 2.159 percent late on Friday. U.S. 30-year bonds fell 10/32 in price, yielding 2.828 percent, compared with Friday’s 2.812 percent.