European Close Market Briefing – 17/10/2017 – by Arjun Lakhanpal

October 18, 2017 by

In European Equity Markets stocks steadied on Tuesday, helped by some well-received earning updates from companies including food group Danone and education firm Pearson. The pan-European STOXX 600 index was flat at 391.43 points, staying close to the four-month highs hit in the previous session.  Danone rose as much as 2.3 percent before paring some gains. Pearson was up 6.1 percent after predicting full-year operating profit in the top half of its forecast range, in the first positive trading news for the British education group in recent years. Airbus rose after agreed to buy a majority stake in Bombardier’s CSeries jetliner program. The deal would come at no cost for Airbus.

In Currency Markets the dollar rose to a one-week high against a basket of currencies on Tuesday on speculation that U.S. President Donald Trump was leaning towards nominating a Fed head who would be more inclined to raise interest rates at a faster pace. Knocked by a stronger dollar, the euro fell to a one-week low of $1.1756, having fallen almost 3 percent since hitting a 2-1/2-year high last month. The euro was last down 0.4 percent at $1.1746. The greenback was up 0.2 percent at 112.38 yen after rising 0.3 percent late on Monday, when it pulled away from a three-week low of 111.64 yen. Sterling fell to $1.32 for the first time in four days on Tuesday, after comments by Bank of England policymakers were interpreted by markets as broadly dovish.

In Commodities Markets  oil prices gave up earlier gains and turned negative on Tuesday as expectations of high U.S. production and exports offset concerns that fighting between Iraqi and Kurdish forces could threaten the country’s crude output. Brent crude futures were down 1 percent, at $57.22 a barrel. U.S. crude was down 1.1 percent, at $51.28 per barrel. Earlier, both contracts were up by nearly 1 percent.  Spot gold was down 0.7 percent at $1,285.40 an ounce, while U.S. gold futures for December delivery lost 1.2 percent to $1,286.80 per ounce. Silver fell 0.5 percent to $17.10 an ounce while platinum was 0.6 percent lower at $923, having touched a one-week low. Palladium rose 1.8 percent to $990 an ounce.

In US Equity Markets  the Dow Jones Industrial Average breached the 23,000 mark for the first time on Tuesday led by more than 5 percent gain in UnitedHealth. The Dow was up 0.18 percent, at 22,997.89, the S&P 500 was up 0.01 percent, at 2,558.04 and the Nasdaq Composite was up 0.04 percent, at 6,626.90. Shares of the largest U.S. health insurer touched a record high after the company reported a stronger-than-expected profit and raised its full-year earnings forecast. That, along with a 2.4 percent rise in Johnson & Johnson led a 0.92 percent gain in the S&P healthcare sector. Goldman Sachs lost 1 percent despite reporting a profit beat and smaller-than-expected trading revenue fall. Morgan Stanley rose 1.4 percent as wealth management business insulated the bank from weakness in trading revenue.

In Bond Markets U.S. 2-year Treasury yields rose to their highest level since November 2008 on Tuesday after the strongest reading on U.S. import prices in more than a year pushed inflation expectations higher. Benchmark 10-year note yields rose to 2.329 percent, but retraced much of the move higher in later trading. They were last down 1/32 in price to yield 2.314 percent. The yield on U.S. 2-year notes rose to 1.554 percent, highest since Nov. 3, 2008. German bund yields fell to their lowest levels since Sept. 12 while British gilts hit their lowest since Sept. 25 during remarks from Bank of England Governor Mark Carney who said that uncertainty had dragged investment and that productivity had picked up less than expected.