European Close Market Briefing – 13/12/2017 – by Arjun Lakhanpal

December 13, 2017 by

In European Equity Markets political jitters hit Italian stocks on Wednesday and the broader European market decreased before a Federal Reserve meeting that could provide more clues on future interest rate moves in the United States next year.  Italy’s parliament will be dissolved between Christmas and the New Year with national elections probably set for March 4, a parliamentary source said on Wednesday. Concern that no clear majority will emerge caused Italy’s FTSE MIB index to fall 1.4 percent Sovereign Italian bonds also fell. The pan-European STOXX 600 benchmark fell 0.2 percent, euro zone blue chips declined 0.5 percent and UK’s FTSE fell less than 0.1 percent.

In Currency Markets the U.S. dollar weakened on Wednesday after consumer price data showed sluggish inflation, adding to concerns the Federal Reserve will be less able to execute multiple rate increases next year. Excluding the volatile food and energy components, consumer prices ticked up 0.1 percent in November, with the annual increase in the core CPI slowing to 1.7 percent in November from 1.8 percent in October.  The dollar index, which weighs the greenback against a basket of currencies, fell 0.26 percent, while the euro was  up 0.19 percent to $1.1762. The Japanese yen strengthened 0.45 percent against the greenback to 113.05 per dollar, while sterling was last trading at $1.3364, up 0.37 percent on the day.

In Commodities Markets  oil prices bounced between positive and negative territory on Wednesday after U.S. crude stockpiles fell more than expected, though that was somewhat offset by a larger-than-forecast rise in gasoline inventories and more growth in U.S. oil production. U.S. crude inventories fell by 5.1 million barrels, more than anticipated, and U.S. production figures hit another new record at 9.78 million barrels a day for weekly data. U.S. West Texas Intermediate crude fell 3 cents to $57.11 a barrel. Brent crude fell 23 cents to $63.04 a barrel.  Spot gold was up 0.1 percent at $1,244.51 an ounce and silver was down 0.4 percent at $15.66 an ounce after hitting a five-month low of $15.59.

In US Equity Markets  stocks inched higher on Wednesday powered by technology stocks but shares of big banks lost steam ahead of a widely-expected interest rate hike in the afternoon. The Dow Jones Industrial Average was up 0.45 percent, at 24,614.54 and the S&P 500 was up 0.23 percent, at 2,670.24. The Nasdaq Composite was up 0.41 percent, at 6,890.22. Among big movers, Western Digital  gained more than 3 percent and was the biggest tech gainer after the company agreed to settle a dispute with Toshiba. Shares of Finisar rose about 30 percent after Apple said it would invest $390 million in the chipmaker to help make chips to power iPhone features.

In Bond Markets U.S. Treasury yields fell on Wednesday as a report on consumer prices in November fell short of analysts’ forecasts, reducing bets on a broad pickup in inflation ahead of the Federal Reserve’s interest rate decision. The benchmark 10-year Treasury yield was 2.385 percent, down 2 basis points from late on Tuesday after touching a near two-week high at 2.426 percent earlier Wednesday. The two-year yield touched nine-plus year peak at 1.852 percent before retreating to 1.823 percent, down 1 basis point on the day, while the five-year yield pulled back from a 6-1/2 year high to 2.158 percent, 1 basis point lower than late Tuesday.