European Close Market Briefing – 03/07/2017 – by Arjun Lakhanpal

July 3, 2017 by

In European Equity Markets stocks rose on Monday, starting the second half of the year on a stronger footing with oil stocks and banks leading a broad bounce off lows hit last week on concern over tightening monetary conditions. The pan-European STOXX 600 index rose 1.1 percent after ending at two-month lows on Friday, posting its best day in more than 2 months. The banking sector index was buoyed by BPER Banca, Bankia and Commerzbank, which all gained more than 4 percent. Carige, up nearly 4 percent, was one of the biggest gainers in Italy on the day its board held a crucial meeting to discuss capital plans for the troubled regional lender. Shares in oil majors BP and Total rose 1.9 and 2 percent respectively.

In Currency Markets the dollar rose broadly on Monday, starting the new quarter on a positive note, bolstered by higher U.S. government bond yields and a private report that showed manufacturing activity increased to its strongest level in nearly three years.  The greenback climbed to a six-week high against the yen at 113.37 yen. It was last up 0.9 percent at 113.34 yen. The euro was last down 0.5 percent at $1.1369. Ahead of Tuesday’s meeting of Sweden’s Riksbank, the Swedish crown was down 0.6 percent at 8.4771 crown per dollar. Any shift in the wording of the Reserve Bank of Australia’s statement, also early on Tuesday, may also support the Aussie, which was 0.6 percent below Friday’s close at $0.7645.

In Commodities Markets oil rose about 1.5 percent on Monday, resuming its longest stretch of daily gains in more than five years after data pointed to moderating U.S. output, though analysts said news of rising OPEC production could cap gains. Brent crude futures were up 71 cents to $49.48 a barrel, off a session low of $48.79. The price rose 5.2 percent last week for a first weekly gain in six. U.S. crude futures were up 81 cents to $46.85 a barrel. Drilling activity for new oil production in the United States decreased for the first time since January, falling by two rigs, while U.S. government data showed crude output fell in April for the first time this year.

In US Equity Markets the Dow hit a record high in late morning trading on Monday as energy and bank stocks gained, but a fall in tech stocks dragged down the Nasdaq. The Dow was up 0.86 percent, at 21,532.82. The S&P 500 was up 0.55 percent, at 2,436.78 but the Nasdaq Composite index was down 0.32 percent, at 6,120.85. Nine of the 11 major S&P sectors were higher, topped by the energy index’s 1.38 percent rise. Tesla rose 2.3 percent after the luxury electric-car maker said it would deliver its mass-market Model 3 sedan to first 30 customers on July 28. EQT Corp rose 2 percent after activist investor Jana Partners disclosed a 5.8 percent stake in the company and urged it to abandon its proposed acquisition of Rice Energy. Rice fell 4.4 percent.

In Bond Markets U.S. Treasury yields rose on Monday, with two-year yields touching their highest in more than eight years after U.S. manufacturing data boosted expectations that the Federal Reserve would raise interest rates again this year as other central banks shift toward tighter monetary policy. Benchmark 10-year yields hit a nearly seven-week high of 2.345 percent, while 30-year yields touched their highest in nearly three weeks of 2.869 percent. In Germany, the bloc’s benchmark issuer, Bund yields touched 0.498 percent before settling at 0.48 percent near the close, up a basis point on the day.