European Close Market Briefing – 05/09/2017 – by Arjun Lakhanpal

In European Equity Markets stocks inched lower on Tuesday dragged down by losses in the heavyweight financial sector as worries over North Korea persisted and caution grew before a ECB policy meeting later in the week. The pan-European STOXX 600 index fell 0.1 percent, giving up the slight gains seen earlier in the session, while euro zone blue chips declined 0.3 percent. Euro zone banks were an outstanding faller, down 1.6 percent to their lowest level in around 10 weeks, with the sector back in focus ahead of Thursday’s ECB meeting that could shed light on the timing for an unwinding of big stimulus. Health stocks rose, led by Germany’s Merck KGAA, up 2.4 percent, which said that it was considering selling its consumer health business.

In Currency Markets the U.S. dollar fell on Tuesday, hitting a one-week low against the yen and on track for its biggest decline in eight days against a basket of currencies, on concern about North Korea’s largest nuclear test and a Federal Reserve official’s comments about low U.S. inflation. The dollar touched 108.87 yen, its lowest since Aug. 29 after North Korea conducted its sixth and biggest nuclear test two days ago. The dollar fell as much as 0.4 percent against the Swiss franc on the risks surrounding North Korea to a session low of 0.9545 franc. The euro gained as much as 0.4 percent to $1.1939 ahead of a European Central Bank policy meeting. The dollar index fell as much as 0.5 percent to a session low of 92.183.

In Commodities Markets U.S. oil prices rose on Tuesday and gasoline fell as the gradual restart of refineries in the Gulf of Mexico that were shut by Hurricane Harvey raised demand for crude and eased fears of a fuel supply crunch. U.S. West Texas Intermediate crude futures jumped by almost 3 percent to $48.64 per barrel. Brent crude futures also rose by 0.9 percent to $53.23 a barrel amid signals the OPEC could extend its output limits beyond the first quarter of 2018. Gasoline futures fell around 4 percent from their last close, to $1.68 per gallon. Spot gold was down 0.2 percent at $1,332.16 an ounce. Silver was down 0.1 percent at $17.91 an ounce, while platinum fell 0.4 percent to $1,003.40. Palladium rose 1.3 percent to $989.20.

In US Equity Markets stocks were lower in late morning trading on Tuesday, with the Dow Jones Industrial Average shedding more than 150 points as tensions around North Korea continued to weigh. The Dow Jones Industrial Average was down 0.76 percent, at 21,820.55 and the S&P 500  was down 0.48 percent, at 2,464.6. The Nasdaq Composite was down 0.46 percent, at 6,405.43. Financial stocks were the worst hit, falling 1.46 percent, after an influential Federal Reserve policymaker struck a dovish tone on interest rates. Shares of United Technologies were down 3.9 percent after the company struck a $30 billion deal to buy avionics and interiors maker Rockwell Collins. Rockwell shares were up 0.75 percent.

In Bond Markets U.S. Treasury yields fell on Tuesday as worries about further nuclear tests from North Korea that stoked tensions with United States and its allies spurred safe-haven demand for U.S. government debt. The yield on benchmark 10-year Treasury notes was down 5 basis points at 2.105 percent, while the 30-year bond yield was more than 4 basis points lower at 2.722 percent.