European Close Market Briefing – 04/12/2017 – by Arjun Lakhanpal

December 4, 2017 by

In European Equity Markets stocks recovered strongly from multi-week lows on Monday after the U.S. Senate passed a tax package delivering significant fiscal stimulus, which investors had anticipated would give extra legs to the bull run in equity markets. Gains in the U.S. dollar helped Germany’s dollar-exposed DAX shoot up from a two-month low, up 1.5 percent. The pan-European STOXX 600 gained 0.9 percent while euro zone blue chips  jumped 1.3 percent, their best gains in more than two months. Bank stocks, seen as the biggest beneficiaries of tax cuts, jumped 1.2 percent on the day. Allianz, BNP Paribas and Santander were among the largest boosts to the index, up 1.3 to 1.9 percent.

In Currency Markets the dollar rose against most currencies on Monday, hitting a three-week high versus the yen after the U.S. Senate approved a major tax overhaul over the weekend that aims to cut taxes for businesses, while proposing a mixed package of changes for individual Americans.  In mid-morning trading, the dollar rose to 113.08 yen, the highest since mid-November, and was last at 112.83, up 0.7 percent. The euro also fell against the dollar, down 0.4 percent at $1.1836, pushing the dollar index to trade up 0.4 percent on the day at 93.255. Sterling rose 0.3 percent at $1.3521 after a member of the European Parliament’s Brexit group said there was a “very good chance” of a deal on an initial divorce package between Britain and the European Union.

In Commodities Markets  oil fell more than 1 percent on Monday as the market saw signs of continuing U.S. production increases, though prices remained in sight of their recent two-year highs thanks to last week’s decision by OPEC and other producers to extend output cuts. Brent crude futures fell $1.00 a barrel to $62.73, while U.S. West Texas Intermediate futures were down 70 cents at $57.66. Drillers in the United States added two oil rigs in the week to Dec. 1, bringing the total count to 749, the highest since September, energy services company Baker Hughes said on Friday.  Spot gold was down 0.3 percent at $1,276.00 an ounce and silver fell 0.7 percent to $16.32 an ounce.

In US Equity Markets main  indexes rose on Monday as Republican-led efforts to slash corporate tax rates cleared a major hurdle, with investors picking stocks that have lagged for much of the year including shares of financial and industrial companies. The Dow Jones Industrial Average was up 0.99 percent, at 24,470.96 and the S&P 500 was up 0.42 percent, at 2,653.41. The Nasdaq Composite lost 0.54 percent at 6,810.39. Among other movers, Aetna shares rose 0.7 percent after drugstore chain operator CVS Health agreed to buy the health insurer for $69 billion in the year’s largest corporate acquisition. CVS shares were down about 4 percent.

In Bond Markets  U.S. Treasury yields fell on Monday but remained higher than their late Friday levels, boosted by increased confidence that the U.S. Congress would enact tax cut legislation after the Senate passed a bill early Saturday. The 10-year note was down 8/32 in price, yielding 2.394 percent, up 3 basis points from its Friday close but around 3 basis points lower than its Monday opening. Germany’s 10-year benchmark government bond yield was 4 bps higher at 0.34 percent, above Friday’s near three-month low of 0.29 percent.