European Close Market Briefing – 15/09/2017 – by Arjun Lakhanpal

In European Equity Markets stocks fell on Friday as another North Korean missile launch softened appetite for riskier banks and miners but still scored their strongest week since July as attractive valuations tempted investors. The pan-European STOXX 600 and euro zone stocks both fell 0.3 percent. Banks fell 0.9 percent after five straight days of gains, showing strain as investors shed the most risky assets, buying defensive sectors such as utilities, up 0.1 percent. H&M shares rose 1.7 percent, helping the retail sector outperform for the second day, after the world’s second largest clothing retailer said autumn sales had started well, though large mark-downs capped its third-quarter sales at 5 percent.

In Currency Markets the dollar weakened against most major currencies on Friday, weighed down by an unexpected decline in U.S. retail sales last month that once again dimmed expectations for an interest rate increase in December. After falling as low as 109.57 yen in Asian trading, the dollar rebounded, rising 0.8 percent to 111.07 yen. Britain’s pound, meanwhile rose above $1.36 on Friday. The pound had already recorded its best day since April on Thursday, after investors brought forward their rate hike bets following the Bank of England’s signal that it would tighten soon.  The euro was up 0.4 percent at $1.1962, staying below a 2-1/2 year high set last week. That pushed the dollar index to 91.779, down 0.4 percent on the day.

In Commodities Markets  Brent oil prices held near five-month highs on Friday, and were on track for the biggest weekly gain since late July, on forecasts for rising demand and the gradual restart of U.S. oil refineries.  Benchmark Brent crude was up 24 cents at $55.49 a barrel, in a volatile session that saw it stretch from an intraday low of $54.86 to a high of $55.75 a barrel. U.S. West Texas Intermediate crude was up 3 cents at $49.92 a barrel. Spot gold was down 0.4 percent at $1,324.58 an ounce. Silver fell 0.6 percent to $17.64 an ounce and was set to mark its first weekly decline in four. Platinum fell 0.8 percent to $970.80 an ounce after touching $968.30, the lowest since Aug. 25. Palladium shed 0.5 percent to $918.

In US Equity Markets  the three major Wall Street indexes inched up to record highs on Friday, as investors shrugged off North Korea’s latest missile test and domestic economic data that did little to move the needle on the timing of an interest rate hike. The Dow was up 0.22 percent, at 22,251.36 and the S&P 500  was up 0.10 percent, at 2,498.15. The Nasdaq Composite was up 0.49 percent, at 6,460.31. The tech sector jumped 0.38 percent, powered by Apple and chip stocks. The semiconductor index rose 1.6 percent, boosted by a near 6 percent pop in Nvidia to a record high after a bullish broker call. Boeing hit a record high, powering the Dow for the second day in a row, after a price target hike from Canaccord Genuity and new orders wins.

In Bond Markets yield spreads between shorter-dated and longer-dated Treasuries contracted on Friday as traders added to bets the Federal Reserve would wait until the end of the year to raise rates and focus on its balance sheet at next week’s policy meeting. The yield spread between five-year and 30-year Treasuries contracted to 95 basis points, the tightest since July 7, before widening to 97 basis points. The benchmark 10-year yield was 2.208 percent, up 1 basis point on the day. The yield on two-year Treasury notes, which is sensitive to traders’ view on Fed policy, was up 1.6 basis points at 1.384 percent.