European Close Market Briefing – 05/12/2017 – by Arjun Lakhanpal

In European Equity Markets stocks fell on Tuesday as cyclical stocks fell, while dwindling enthusiasm over a U.S. tax bill weighed on financial service providers. The pan-European STOXX 600 index , fresh from its best day in six weeks, fell 0.2 percent, as weak financials and healthcare stocks outweighed a rally in consumer staples and utilities, while tech stocks rebounded, tracking U.S. peers. Euro zone banks fell after their best gains in two months, falling 0.5 percent. Santander, BNP Paribas and Deutsche Bank were among those losing ground after gaining in the previous session. British sub-prime lender Provident Financial fell 10.2 percent after UK regulator FCA opened an investigation into its Moneybarn unit.

In Currency Markets the dollar rose for a second straight session on Tuesday, a day after posting its biggest daily rise in a week, as the currency continued to benefit from optimism surrounding U.S. tax reform. Against the yen, the dollar gained 0.2 percent to 112.70 yen. The euro, meanwhile, was down 0.3 percent versus the dollar at $1.1832. Meanwhile, sterling trimmed earlier losses to trade 0.3 percent down on the day at $1.3427 as broad disappointment over the lack of a Brexit deal prompted some investors to cut their long bets. In mid-morning trading, the dollar index, a gauge of the greenback’s value against six major currencies, was up 0.1 percent at 93.308.

In Commodities Markets oil rose on Tuesday, supported by strong demand, expectations of a decrease in U.S. crude inventories and an OPEC-led deal to extend oil output cuts. Brent crude was up 63 cents at $63.08 a barrel while U.S. West Texas Intermediate crude rose 37 cents to $57.84.  Spot gold was at $1,267.89 an ounce, down 0.6 percent, while U.S. gold futures for December delivery were down $7.20 an ounce at $1,270.50. Among other precious metals, silver was down 1 percent at $16.16 an ounce, while platinum was 0.9 percent lower at $915.60, and palladium was down 0.1 percent at $991.20. Copper lost 4.35 percent to $6,529.00 a tonne as inventories rose, its biggest single-session decline in more than two years.

In US Equity Markets stocks  rose and technology stocks recovered from a two-day selloff on Tuesday, with investors assessing a change to the Senate’s version of the tax overhaul bill that could affect the ability of companies to cut their tax bills. The Dow was up 0.11 percent, at 24,315.61, the S&P 500 was up 0.33 percent, at 2,648.06 and the Nasdaq Composite was up 0.87 percent, at 6,834.16. Technology stocks gained about 1.29 percent led by gains in Microsoft, Amazon and Apple. Shares of Twenty-First Century Fox climbed to a life-high after a report that Walt Disney was in the lead to acquire much of Fox’s media empire, though rival suitor Comcast remained in contention. Disney shares fell 2.2 percent, and Comcast also decreased 1.6 percent.

In Bond Markets  short-dated U.S. Treasury yields rose to their highest in more than eight years on Tuesday as investors’ expectations grew for the U.S. Congress to pass tax reform legislation and for the Federal Reserve to raise interest rates several times next year. The 2-year Treasury note, the most sensitive to Fed policy expectations, rose to 1.835 percent. The three-year note touched 1.95 percent. Benchmark 10-year notes last rose 3/32 in price to yield 2.3687 percent, from 2.379 percent late on Monday.