European Close Market Briefing – 14/12/2017 – by Arjun Lakhanpal

In European Equity Markets weakness in bank stocks dragged stocks lower on Thursday as the financial sector caught the cold from U.S. and Asian trading after a less hawkish than expected tone from the U.S. Federal Reserve. They dragged Europe’s STOXX 600 down 0.2 percent, while euro zone blue chips fell 0.1 percent. Tech was the worst-performing sector, with chipmakers Dialog Semiconductor and ASML down 2.9 and 0.5 percent. The sector was also weighed by French technology consultancy Atos which fell 2.8 percent after Gemalto rebuffed a takeover offer. Dassault Aviation shares fell 2.2 percent after the firm said it planned to axe and relaunch its Falcon 5X jet after engine delays.

In Currency Markets the euro consolidated gains at a one-week high on Thursday after the European Central Bank kept its ultra-easy policy stance unchanged, an outcome that was widely expected by financial markets. Against the dollar, the euro was flat on the day at $1.18275. Against the yen, the dollar inched up 0.1 percent to 112.69 yen, after sliding 0.9 percent on Wednesday and having retreated from Tuesday’s four-week high of 113.75 yen. The pound was flat at $1.3425 after the BoE said last week’s breakthrough in Brexit talks has reduced the risk of Britain leaving the European Union in a disorderly way and may boost economic confidence.

In Commodities Markets  oil prices came under pressure on Thursday after the International Energy Agency (IEA) increased its forecast for growth in U.S. oil output next year, raising the prospect of excess supply. U.S. West Texas Intermediate futures fell 29 cents to $56.31 a barrel, down from a high of $56.93.  Brent crude futures were at virtually unchanged at $62.45 a barrel, after hitting a session high of $63.14. The Paris-based IEA said U.S. crude output next year would increase by 870,000 barrels per day (bpd), up from its November forecast of 790,000 bpd. Spot gold had edged down 0.2 percent to $1,253.21 an ounce and silver fell 1.2 percent to $15.87 an ounce, after hitting a five-month low of $15.59 in the previous session.

In US Equity Markets the main indexes hovered around record levels on Thursday, perked up by the Federal Reserve’s upbeat view on the economy and news that the Republicans’ tax code overhaul is set to face final votes in Congress before the year-end. The Dow Jones Industrial Average rose 0.16 percent to 24,623.74. The S&P 500 was up 0.16 percent, at 2,667.01 and the Nasdaq Composite was up 0.31 percent, at 6,896.98. Amazon rose 1 percent and Alphabet 1.6 percent, contributing the most to gains on the S&P 500 and the Nasdaq. Telecom service providers Verizon, AT&T and CenturyLink were down between 0.6 percent to 1.4 percent and weighed on the S&P telecom index.

In Bond Markets  U.S. Treasury yields rose early Thursday as a stronger-than-forecast increase in domestic retail sales in November supported the view of solid economic growth in the fourth quarter and further rate hikes from the Federal Reserve. The yield on benchmark 10-year Treasury notes was 2.378 percent, up 2 basis points from late on Wednesday, while the two-year yield was 1.815 percent, up 3 basis points from late Wednesday.