European Close Market Briefing – 18/12/2017 – by Arjun Lakhanpal

In European Equity Markets stocks rose for the first time in four session on Monday, with banks leading the charge north on hopes the highly anticipated tax reform in the U.S. will get passed this week and provide a boon for the financial sector. The Stoxx Europe 600 index rallied 1.2 percent to close at 392.66. Among regional benchmarks, Germany’s DAX 30 index jumped 1.6 percent to 13,312.30, while France’s CAC 40 index put on 1.3 percent to 5,420.58. The U.K.’s FTSE 100 index rose 0.6 percent to 7.537,01.  Shares of Thales SA  jumped 8.2 percent and Gemalto NV added 5.6 percent after news Thales will buy the Dutch security company for 4.8 billion euros.

In Currency Markets the dollar fell against a basket of major currencies on Monday, as concerns grew on whether a proposed U.S. tax reform program would have a major impact on economic growth, after the bill moved another step closer to passage over the weekend. The U.S. currency had edged higher after Republicans on the House-Senate negotiating committee on Friday put the finishing touches to a sweeping tax overhaul that involves large cuts in levies on corporations. Against a basket of major currencies, the dollar fell 0.4 percent to 93.568. The euro benefited from the dollar’s weakness, gaining 0.5 percent to $1.1807. The dollar was 0.1 percent lower against the yen at 112.54 yen following Friday’s rise of 0.2 percent.

In Commodities Markets  oil prices edged higher on Monday, supported by a North Sea pipeline outage and a workers’ strike in the Nigerian energy industry. Brent crude futures were up 27 cents at $63.50 a barrel.  U.S. crude futures rose 14 cents to $57.44. Brent had traded as high as $63.91 earlier in the day but fell back after Ineos, operator of the North Sea Forties pipeline, said the crack that shut it down had not spread. The 450,000-barrel-per-day link that provides some of the physical crude underpinning Brent has been shut since Dec. 11, forcing Ineos to declare force majeure on all oil and gas shipments from it last week.  Spot gold added 0.6 percent to $1,262.52 an ounce. U.S. gold futures gained 0.67 percent to $1,265.90 an ounce.

In US Equity Markets the major stock indexes hit record highs in a broad rally on Monday as the long-awaited bill to lower taxes looked set to be passed into law and a flurry of dealmaking buoyed sentiment. The Dow was up 0.7 percent, at 24,824.62 and the S&P500 was up 0.61 percent, at 2,692.18. The Nasdaq Composite was up 0.79 percent, at 6,991.41. The materials index gained 1.23 percent, the most among the major 11 S&P sectors. The utilities index was the lone decliner with a decrease of 0.8 percent. Twitter jumped more than 8 percent to a 1-year high after J.P. Morgan said it expects the company to post double-digit daily average user growth of 10 percent in 2018.

In Bond Markets  Portugal’s bond yields hit their lowest since early 2015 in early trading before inching up, after an unprecedented two-notch upgrade from Fitch boosted investor optimism. In morning trades on Monday, Portugal’s 10-year bond yield tumbled to 1.73 percent, its lowest level since early 2015. Meanwhile, the yield curve in Germany, the euro zone’s biggest economy and its benchmark bond issuer, was its flattest in almost six months. The gap between German 30 and 2-year bond yields shrank to 178 basis points, its tightest since late June.