European Close Market Briefing – 07/11/2017 – by Arjun Lakhanpal

In European Equity Markets stocks pulled back from two-year highs on Tuesday as heavyweight defensive sectors fell and some earnings reports disappointed, though oil stocks were a bright spot.  The pan-European STOXX 600 index reversed earlier gains to end the session 0.5 percent lower, after trading at its highest level since August 2015 over the past few days. The DAX ended the session down 0.7 percent after hitting a new high. BMW fell 2.8 percent after its third-quarter earnings fell 5.9 percent, due to upfront costs for new technologies and models. Chipmaker Dialog Semiconductor lost 5.7 percent following a cautious outlook for the fourth quarter.

In Currency Markets the dollar rebounded against a basket of currencies on Tuesday, as investors renewed bets that monetary policy will continue to diverge between the United States and the euro zone. The euro was 0.31 percent lower to $1.1573 against the dollar. Sterling fell against the dollar, iving up some of its gains from Monday, with Britain set to enter the next stage of negotiations on its departure from the European Union on Thursday. The British pound was 0.43 percent lower against the dollar. Australia’s central bank on Tuesday left its cash rate at a record-low 1.5 percent, and it looked likely to remain sidelined for months, with inflation low and debt-laden consumers cautious. The Australian dollar lost 0.68 percent to $0.7638 against the greenback.

In Commodities Markets  oil eased on Tuesday, having posted its largest gain in six weeks the previous day, while tension flared between Saudi Arabia and Iran, just as the Saudi crown prince tightened his grip on power.  Brent crude futures were down 49 cents at $63.78 a barrel, having climbed by 3.5 percent on Monday. U.S. West Texas Intermediate crude was down 36 cents at $56.99 a barrel. Spot gold was down 0.3 percent at $1,275.99 an ounce, while U.S. gold futures for December delivery were $4.90 an ounce lower at $1,276.70. Among other precious metals, silver was down 0.7 percent at $17.10 an ounce. Platinum was down 1.4 percent at $921 an ounce, while palladium was 0.5 percent lower at $995.47.

In US Equity Markets stocks  lost steam in late afternoon on Tuesday after scaling to record levels with the S&P and the Dow trading flat and the Nasdaq falling on weak forecast from travel services company, Priceline. The Dow was down 0.06 percent, at 23,533.12, the S&P 500 was down 0.02 percent, at 2,590.58. The Nasdaq Composite was down 0.28 percent, at 6,767.67. Shares of Priceline fell 11 percent and that of travel-review website operator TripAdvisor hit a five-year low after the companies gave soft fourth-quarter profit forecasts.  Valeant Pharma rose 14.8 percent after the company’s profit beat Wall Street estimates. Emerson Electric fell 2.5 percent as the factory automation equipment maker’s forecast disappointed investors.

In Bond Markets U.S. Treasury yields were little changed on Tuesday in advance of a $24 billion auction of three-year government debt, the first part of this week’s $64 billion quarterly refunding whose proceeds will be used to repay $42.7 billion to bondholders. The benchmark 10-year Treasury yield was 2.320 percent, unchanged from late Monday when it hit a two-week low. The 30-year yield was 2.793 percent, flat on the day, after touching its lowest level since late September on Monday. The two-year yield was a tad higher at 1.625 percent, leaving its spread against 10-year yield just below 70 basis points, which was a level last seen in November 2007.