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

In European Equity Markets a sell-off in heavyweight basic resources stocks prompted a third day of losses for European shares on Friday, posting their worst week this year amid a ramp-up of tensions between the United States and North Korea. Volatility jumped and the pan-European STOXX 600 fell 1.1 percent, taking weekly losses to 2.8 percent, its worst since early November 2016. On Friday basic resource stocks fell 2.6 percent to a month low as metal prices fell.   Falling crude prices made oil & gas stocks a weight too, falling 1 percent with Tullow Oil the biggest faller. Banks also fell 1.6 percent, with the sector posting its worst week in nine months.

In Currency Markets the U.S. dollar weakened against a basket of currencies on Friday, after data showed U.S. consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year. The dollar index, which tracks the greenback against six major currencies, was down 0.13 percent to 93.28, after earlier falling to a one-week low of 92.992. The U.S. consumer price index edged up 0.1 percent last month after being unchanged in June. Economists polled by Reuters had expected the CPI to rise 0.2 percent in July. The dollar was little changed against the Swiss Franc after erasing losses from earlier in the session.

In Commodities Markets oil prices fell slightly on Friday after the International Energy Agency said weak OPEC compliance with production cuts was prolonging a rebalancing of the market despite strong demand growth. Brent crude was down 11 cents at $51.79 a barrel, having earlier fallen 50 cents, or around 1 percent, to its lowest since Aug. 1. U.S. West Texas Intermediate crude was down 15 cents at $48.44 per barrel, having earlier declined 1 percent to its lowest since July 26. U.S. crude was on track to close more than 2.4 percent lower on the week, with Brent on track to close 1.8 percent lower. Oil touched 2-1/2-month highs on Thursday but closed down amid oversupply concerns.

In US Equity Markets stocks were modestly higher in late morning trading on Friday as investors cautiously dipped back into riskier assets, after a three-day losing streak on concerns over escalating tensions between the United States and North Korea. A weaker-than-expected July consumer price data also supported the recovery. Still, the S&P and the Dow were on track to post their biggest weekly loss in about five months and the Nasdaq on course to post its biggest weekly fall in about six weeks.  Six of the 11 major S&P sectors were higher, with the technology’s 0.36 percent rise leading the advancers. Nvidia’s quarterly revenue in its data center and automotive businesses missed estimates, dragging the chipmaker’s shares down 5.43 percent.

In Bond Markets U.S. Treasury yields fell on Friday as softer-than-expected U.S. inflation data for July further eroded expectations of an interest rate hike by the Federal Reserve at its December monetary policy meeting. Both benchmark U.S. 10-year note and 30-year bond yields, which move inversely to prices, fell to six-week lows after the inflation data, while yields on two-year notes, considered the most sensitive to rate hike expectations, sank to an eight-week low. U.S. two-year yields fell to an eight-week low of 1.314 percent, down from Thursday’s 1.335 percent. Two-year yields last traded at 1.314 percent.