European Close Market Briefing – 12/06/2017 – by Arjun Lakhanpal

June 12, 2017 by

In European Equity Markets stocks were hit on Monday by big falls in Apple suppliers and other tech shares, overshadowing well-received election results in France and Italy. Shares in chipmakers STMicro, Dialog and AMS all fell between 6.7 percent to 9.2 percent following heavy losses in U.S. and Asian peers. The pan-European index STOXX 600 closed 1 percent lower, having hit its lowest level in seven weeks earlier in the session. France’s CAC index fell 1.1 percent and Italy’s blue chip index fell 1 percent, after briefly inching up into positive territory earlier in the day. Among other gainers on the STOXX was Italian lender UBI Banca, which rose nearly 4 percent on the first day of a 400 million euro cash call to strengthen its capital position.

In Currency Markets the dollar was steady on Monday with no major U.S. data releases and ahead of Wednesday’s Federal Open Market Committee meeting at which the central bank is overwhelmingly expected to increase U.S. interest rates. Britain’s pound was back under pressure, down half a percent, after falling more than 2 percent following last week’s snap elections that left the Conservatives short of a ruling majority and cast a cloud of political uncertainty over the country. Sterling fell 0.55 percent to $1.2650. The euro also was flat at $1.12. Against the Japanese yen, the dollar rose 0.55 percent to 109.73, after data showed inflation held steady in May.  The dollar index was little changed at 97.248.

In Commodities Markets oil edged up less than 1 percent on Monday on signs of inventory declines in the United States and news that Saudi Arabia will limit volumes of crude to some Asian buyers in July and deepen cuts to the United States. Brent crude futures rose 0.4 percent, to $48.35 a barrel, having hit a session high of $49.15. U.S. West Texas Intermediate crude futures gained 0.7 percent, to $46.13, having peaked at $46.71.  Spot gold was steady at $1,266.16 an ounce. Silver was at a one-week low of $16.96 an ounce, down 1 percent, while Platinum was up 1 percent at $943. Palladium gained 0.1 percent to $891.50 an ounce after climbing above $910 on Friday, its highest since 2001.

In US Equity Markets the Nasdaq Composite index took a beating for the second trading day as a bout of profit-taking took a toll on the richly-valued technology stocks. The Dow Jones Industrial Average was down 0.14 percent, at 21,241.37, the S&P 500 was down 0.19 percent, at 2,427.06 and the Nasdaq Composite was down 0.74 percent, at 6,161.76. The S&P technology sector was down 1.4 percent as other closely watched stocks, including those of Microsoft, Facebook, Netflix and Alphabet, also took a hit. Shares of General Electric rose 3.5 percent after the company said Jeff Immelt would retire as chief executive and would be replaced by John Flannery, the head of GE healthcare, ending a years-long succession plan.

In Bond Markets short-dated U.S. Treasury yields hit multi-week peaks on Monday ahead of three- and 10-year note auctions, while uncertainty about whether the Federal Reserve will take a hawkish or dovish stance this week limited the move higher in yields. U.S. two-year yields touched 1.359 percent, their highest in a month. Benchmark 10-year Treasuries were last down 5/32 in price to yield 2.216 percent, from a yield of 2.199 percent late on Friday. U.S. 30-year yields were at 2.866 percent, up from 2.853 percent late on Friday.