European Close Market Briefing – 08/06/2017 – by Arjun Lakhanpal

In European Equity Markets banks and utilities supported European stocks on Wednesday, with relief that Spain’s struggling Banco Popular  was being rescued by Santander lifting bank shares. The STOXX 600 index fell 0.1 percent, weighed down by a late decline in energy stocks. Britain’s FTSE 100 index fell 0.6 percent and Germany’s DAX inched 0.1 percent.  European utilities .SX6P also gained, led by Germany’s E.ON and RWE. Both rose more than 5 percent after the country’s highest court declared a nuclear fuel tax illegal, enabling them to claim back 6 billion euros in cash. Shares in Swedish biometric firm Fingerprint Cards were the top STOXX risers, jumping 11.6 percent, after confirming an order for its sensors.

In Currency Markets  the euro slipped against the dollar on Thursday after the European Central Bank kept interest rates on hold, while the greenback strengthened against a basket of currencies as U.S. Senate testimony by former FBI Director James Comey got underway. The ECB dropped a reference to further interest rate cuts, while repeating it expects rates to remain at record lows for an extended period and well beyond its asset purchase program.  ECB Chief Mario Draghi said policymakers had not discussed scaling back its massive bond-buying program. The euro, which weakened on Wednesday on reports that the ECB would cut its inflation forecasts, was down 0.36 percent to $1.1215, after dipping to a 1-week low of $1.1196.

In Commodities Markets oil prices pared losses on Thursday, having hit one-month lows earlier in the day after unexpected surge in U.S. inventories and the return of more Nigerian crude aggravated investor concerns about an already oversupplied market. The oil price has slipped below $50 a barrel despite a pledge by the world’s largest exporters to extend an existing cut in production of 1.8 million barrels per day (bpd) into next year in an effort to reduce bulging global inventories. Brent crude was flat at $48.06 a barrel, having touched an earlier low of $47.56, while U.S. crude futures were up 15 cents at $45.87 a barrel. U.S. inventories of crude oil and gasoline surprisingly rose last week as refinery runs declined and exports fell.

In US Equity Markets stocks were little changed in choppy opening on Thursday as former FBI Director James Comey’s testimony got underway.   Eight of the 11 major S&P sectors were lower, with the defensive utilities index’s 1.08 percent loss topping the decliners. Shares of Alibaba Group Holding were up 9.5 percent at $137.55 after the company said it expects revenue growth of 45-49 percent in the 2018 fiscal year. Yahoo, which owns a 15.5 percent stake in Alibaba also rose 7.2 percent to $54.18. Nordstrom jumped 11.4 percent to $45.09 after the department store operator said that some members of the controlling Nordstrom family have formed a group to consider taking the company private.

In Bond Markets U.S. Treasury long-dated yields pared gains on Thursday, in line with German bonds, after the European Central Bank reduced its inflation forecast to reflect lower oil prices. The lower inflation outlook suggested that the ECB will likely keep its stimulus program for now even though growth projections for the region were revised higher. Benchmark German 10-year bonds hit session lows of 0.253 percent after Draghi’s comment. In early trading, U.S. 10-year Treasuries were last down 1/32 in price, with yields at 2.185 percent, compared with 2.198 percent before Draghi spoke.