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

In European Equity Markets stocks extended their fall on Tuesday, with healthcare stocks particularly weak, as a diplomatic spat in the Middle East weakened appetite for risky assets across the board. The pan-European STOXX 600 benchmark fell 0.7 percent, falling for a second session, while euro zone stocks and blue-chips followed suit. Utilities were the best performers, up 0.6 percent, as investors fled to safety. Also among top gainers was Lufthansa, rising 1.2 percent after the German airline’s CEO said he was optimistic on demand and improving traffic from the United States and Asia. Spain’s troubled Banco Popular fell 6.2 percent to hit another record low after Barclays cut its price target on the stock.

In Currency Markets the dollar fell to a more than six-week low against the yen on Tuesday, falling below a key technical level as treasury yields decreased on heightened caution ahead of a trio of events on Thursday. The dollar was down 0.91 percent against the yen at 109.45. The euro was up 0.16 percent against the dollar to $1.127. Sterling was down 0.09 percent against the dollar to $1.2889. With two days to go until Britain holds a national election, opinion polls have shown that Prime Minister Theresa May’s lead over the opposition Labor party has ebbed over the last three weeks, with some putting her majority in doubt. The dollar index was down 0.18 percent at 96.624.

In Commodities Markets  oil prices fell further below $50 a barrel on Tuesday on concerns that an OPEC effort to tighten the market could be coming under pressure from a diplomatic rift in the Middle East and from sustained high inventories in the United States. Benchmark Brent crude oil was down 29 cents a barrel at $49.18, down around 8 percent from its level before OPEC and its non-OPEC allies said they were extending cuts until March 2018. The initial six-month deal to curb output had been due to run till the end of this month. U.S. light crude was down 18 cents at $47.22. Spot gold was up 1 percent at $1,292.34 an ounce. Silver rose 0.9 percent to $17.67 an ounce, its highest level since April 25.

In US Equity Markets stocks edged lower in late morning trading on Tuesday as investors shunned riskier assets ahead of what is expected to be a busy Thursday, when Britain goes to the polls and former FBI director James Comey testifies before Congress. The Dow was down 0.12 percent, at 21,159.24 and the S&P 500 was down 0.12 percent, at 2,433.06. The Nasdaq Composite was up 0.08 percent, at 6,300.42. Eight of the 11 major S&P 500 sectors were lower, with the financial index’s 0.35 percent fall leading the decliners.  Wal-Mart Stores fell 1.5 percent after Amazon.com said it would offer Prime subscription service at a discount to its U.S. customers on government aid, taking aim at a key customer base of the discount retailer. Amazon was up 0.2 percent.

In Bond Markets U.S. Treasury yields fell on Tuesday as nervous investors favored bonds and other safe-haven assets ahead of a trio of events on Thursday: Britain’s general election, the European Central Bank’s policy meeting and former FBI Director James Comey’s testimony before a Senate panel. The 10-year yield was 2.145 percent, down nearly 4 basis points from late on Monday. German Bund yields fell to their lowest level in nearly six weeks at 0.25 percent. French equivalents fell below 0.70 percent for the first time since early January, narrowing the gap over German yields to 39 basis points. Spanish 10-year yields fell as much as 5 bps to 1.52 percent, just above four-month lows, while Irish yields hit five-month lows at 0.73 percent.