European Close Market Briefing – 09/06/2017 – by Arjun Lakhanpal

June 10, 2017 by

In European Equity Markets stocks were choppy on Friday after Britain’s election delivered no clear winner on the eve of Brexit talks, though a slump in sterling gave an edge to shares in UK exporters. The pan-European STOXX 600 index ended the session 0.3 percent higher, having moved in and out positive territory throughout the day, while the UK’s internationally-facing blue chip FTSE 100  index outperformed with a gain of 1 percent.  On the broader European market, Italian bank UBI Banca rose 3.5 percent, among top gainers on the STOXX, as investors were upbeat about a possible rescue of two troubled regional lenders. Stocks linked to the British housebuilding industry were the biggest STOXX fallers.

In Currency Markets the dollar rose to a 10-day high against a basket of currencies on Friday, boosted by a weaker British pound after Prime Minister Theresa May’s Conservative Party lost its parliamentary majority in national elections. The dollar index, which tracks the greenback against six major rivals, was up 0.46 percent at 97.364. The index had fallen to a seven-month low midweek on caution ahead of U.S. Senate testimony by former FBI Director James Comey and the British election. Britain’s pound fell as much as 2.5 percent after an election that denied any party a majority in Parliament and fomented a sense of political chaos just days before Brexit talks begin. It recovered a little to trade down 1.68 percent to $1.2733.

In Commodities Markets oil prices rose about 1 percent on Friday, bouncing a bit from steep falls earlier in the week as a declaration of force majeure in Nigeria prompted some buying in a market still worried about the global crude glut. Brent crude oil was up 48 cents at $48.34 a barrel. U.S. crude was 39 cents higher at $46.04 a barrel. U.S. crude and Brent benchmarks remained on track for weekly declines of more than 3 percent, pressured by big U.S. inventories and heavy worldwide flows. The Shell Development Company of Nigeria declared force majeure on Nigerian Bonny light crude oil after someone drilled a hole into the Trans Niger Pipeline, causing a leak.

In US Equity Markets stocks touched record highs in late morning trading on Friday as bank stocks rose, while investors shrugged off the surprise result of the British general election. All three major indexes are on track to end the week higher, with focus turning to the Federal Reserve’s meeting next week, where it is widely expected to raise interest rates. The Dow got a boost from Goldman Sachs’ 1.9 percent gain, while a more than 2 percent rise in shares of both JPMorgan and Bank of America helped lift the S&P 500 index. The financial index’s 1.46 percent rise topped the gainers among the major S&P 500 sectors. The S&P 500 was up 0.45 percent, at 2,444.93. The Nasdaq Composite was up 0.3 percent, at 6,340.81.

In Bond Markets U.S. government bonds pulled back Friday, tracking toward their third straight session of declines, as traders continued to pare back bets that had driven yields to their lowest level in nearly seven months. In recent trading, the yield on the benchmark 10-year Treasury note was 2.225%, compared with 2.195% Thursday. Yields rise as bond prices fall.  Demand for Treasurys was lessened by a couple of factors Friday, including the lifting of political uncertainty related to the U.K. general elections and testimony from former FBI Director James Comey, both of which took place Thursday.