European Close Market Briefing – 18/07/2017 – by Arjun Lakhanpal

July 19, 2017 by

In European Equity Markets stocks fell on Tuesday after disappointing Ericsson and Lufthansa earnings, while scaled-back expectations of monetary tightening by major central banks dented financial stocks. The pan-European STOXX 600 fell by more than 1 percent with European banks down by 1.6 percent and lower bond trading revenue at Goldman Sachs adding to the selling pressure. Ericsson fell by nearly 16 percent after cutting its forecast for the mobile infrastructure market and reporting a wider than expected loss, a further blow to a company that is undertaking cost cuts. German airline Lufthansa fell 1.2 percent from 10-year highs, the worst DAX performer, as cautious second-half comments overshadowed a profit forecast hike.

In Currency Markets the dollar hit its lowest against the euro and Swiss franc in more than a year on Tuesday, with the broader dollar index touching a more than 10-month low, on reduced confidence in U.S. President Donald Trump’s agenda and jitters over hawkish central banks abroad. The dollar touched 0.9525 franc, its lowest against the Swiss currency since late June 2016, while the dollar hit a three-week low against the Japanese yen of 111.69 yen. The euro was up 0.71 percent to $1.1559 against the dollar, and hit its strongest level against the U.S. currency since May 2016. The dollar index, which measures the greenback against a basket of six major rivals, touched its lowest since early September of 94.476.

In Commodities Markets oil prices rose on Tuesday as demand soaked up some of the surplus supplies from OPEC and the United States, but traders said the market remained in a tight range and showed few signs of big short-term moves. Benchmark Brent crude was up 70 cents at $49.12 a barrel, while U.S. light crude oil was 65 cents higher at $46.67. Spot gold was up 0.5 percent at $1,240.51 an ounce, having touched $1,242.52, its highest since July 3. Meanwhile the price of silver gained 1 percent to $16.23 an ounce after touching a two-week high at $16.26. Platinum gained 0.4 percent to $925.1 while palladium fell by 0.1 percent to $863.7.

In US Equity Markets  the S&P and the Dow were lower in late morning trading on Tuesday, weighed by tepid earnings from big banks and a setback to President Donald Trump’s pro-growth legislative agenda after Republican effort to overhaul healthcare collapsed. The Dow Jones Industrial Average was down 0.46 percent, at 21,531.26, the S&P 500 was down 0.14 percent, at 2,455.60. The Nasdaq Composite was up 0.07 percent, at 6,318.72. The S&P healthcare sector was under pressure, falling 0.52 percent, after the healthcare bill to replace Obamacare sank in the Senate, as Republicans remained divided on how to repeal and replace the Affordable Care Act.

In Bond Markets  U.S. Treasury yields fell on Tuesday, as investors grew cautious about the latest political drama in Washington around healthcare legislation and more data pointed to benign inflation with a decrease in import prices for a second straight month. In mid-morning trading, U.S. 10-year yields fell to 2.267 percent from 2.309 percent late on Monday. Yields earlier hit a three-week low of 2.266 percent.  U.S. 30-year bonds were down 21/32 in price to yield 2.859 percent, from 2.893 percent Monday. U.S. two-year yields were down at 1.351 percent from Monday’s 1.36 percent.