European Close Market Briefing – 08/11/2017 – by Arjun Lakhanpal

In European Equity Markets financial stocks weighed on European indexes on Wednesday amid doubts over U.S. tax reform plans and the “Trumpflation” trade and concerns over some European lenders’ earnings and over non-performing loans in Italy. The pan-European STOXX 600 fell 0.1 percent as the indexes of financial services and banks fell 0.4 percent and 0.2 percent respectively. Creval’s move to raise cash in order to shed bad debts prompted investors to dump the shares of the lender’s domestic peers on concerns they may also need fresh capital. Shares in Creval lost 30 percent following the announcement of the share issue. Banco BPM, Italy’s third-largest bank, and BPER Banca fell 7.5 percent and 4.4 percent respectively.

In Currency Markets the dollar fell to a more than one-week low against the yen on Wednesday, pressured by worries over possible delays to President Donald Trump’s tax reform plans. The dollar was down 0.33 percent to 113.62 yen, after having fallen as low as 113.4 yen, earlier in the session. Sterling fell against the greenback with a string of scandals in Britain’s ruling Conservative party and evidence of growing doubts over Prime Minister Theresa May’s ability to deliver a good Brexit deal putting pressure on the pound. The Canadian dollar strengthened against its U.S. counterpart, adding to its gains after comments by Bank of Canada Governor Stephen Poloz the day before that were less dovish than investors had expected.

In Commodities Markets  oil prices were little changed on Wednesday as rising political tensions in the Middle East offset U.S. government data showing an increase in domestic crude production and a surprise build in stockpiles. Brent futures were down 0.1 percent, at $63.65 a barrel, while U.S. West Texas Intermediate crude was down 0.3 percent, at $57.04 per barrel. U.S. crude production rose to 9.6 million barrels per day during the week of Nov. 3, the most in a week on record according to the EIA data going back to 1983. Spot gold was up 0.7 percent at $1,283.80 per ounce. Silver gained 0.7 percent to $17 an ounce while platinum was up 1 percent at $932 an ounce. Palladium was up nearly 2 percent, at $1,012 per ounce.

In US Equity Markets  stocks stalled in late morning trading on Wednesday as weak oil prices weighed on energy stocks and doubts over a Republican tax plan and the broader outlook for U.S. growth hurt banks. The Dow was down 0.06 percent, at 23,543.76, the S&P 500 was down 0.05 percent, at 2,589.30. The Nasdaq Composite was up 0.09 percent, at 6,774.18. Shares of Snapchat operator Snap fell 14.5 percent in trading after China’s Tencent took a 12 percent stake. The stock had fallen nearly 20 percent in premarket trading, a day after Snap reported much-slower-than expected advertising revenue and user growth. Regeneron Pharmaceuticals was up 2.9 percent, after the drugmaker reported a better-than-expected quarterly profit.

In Bond Markets U.S. Treasury yields edged higher on Wednesday with the yield curve close to its flattest level in a decade, in advance of a $23 billion auction of 10-year government securities, the second part of the $64 billion quarterly refunding this week. The 10-year Treasury note yield was marginally higher at 2.313 percent on the open market, while the 30-year bond yield was up half a basis point at 2.775 percent. The two-year yield rose nearly 1 basis point to 1.637 percent.