European Close Market Briefing – 21/06/2017 – by Arjun Lakhanpal

In European Equity Markets weakness among financial and energy sectors led stocks to fall again on Wednesday, as Provident Financial fell following a profit warning, though Italian lenders bucked the downbeat trend. Europe’s STOXX 600 fell 0.2 percent, extending the previous session’s losses slightly. Provident lost as much as 20 percent after warning that disruption from the reorganisation of its consumer credit division would weigh on its results for the rest of the financial year. Italy’s equity market provided some relief as banks UBI Banca, BPER Banca, UniCredit and Intesa Sanpaolo all gained between 2.5 percent to over 5 percent after Intesa offered to buy the good assets of two troubled Veneto banks.

In Currency Markets the dollar was little changed against a basket of currencies on Wednesday, hovering at a one-month peak as it consolidated gains from earlier this week on expectations of a possibly another Federal Reserve interest rate increase later this year. Sterling rose after a Bank of England’s chief economist Andy Haldane said he expected to back a rate increase this year.  The Norwegian crown hit near a one-month low against the dollar, and last traded at 8.5376 crowns per dollar, down nearly 0.1 percent on the day. The Canadian dollar traded at C$1.3328 per dollar, down 0.5 percent from late on Tuesday. The euro tacked on 0.12 percent to $1.1148.

In Commodities Markets oil prices decreased on Wednesday despite a larger-than-expected decline in U.S. crude and gasoline inventories, as investors remained concerned about high global crude output and the nagging supply glut. Brent crude futures fell 27 cents at $45.75 a barrel, after touching seven-month lows at $45.53. U.S. crude futures fell 17 cents to $43.34. On Tuesday, U.S. crude hit not seen since September on Tuesday. The U.S. Energy Information Administration said crude inventories declined by 2.7 million barrels, exceeding expectations for a 2.1 million-barrel decrease. Spot gold was flat at $1,243.21 an ounce and silver was down 0.3 percent at $16.41 an ounce, just above a six-week low hit in the previous session.

In US Equity Markets  the Nasdaq Composite index was higher in late morning trading on Wednesday, boosted by biotechnology stocks, while the Dow Jones Industrial Average and the S&P 500 were dragged lower by financial stocks. The Dow was down 0.06 percent, at 21,454.21, the S&P 500 was up 0.09 percent, at 2,439.27. The Nasdaq Composite index was up 0.59 percent, at 6,224.82. Biotechs were the biggest gainers on the index with Celgene, Regeneron and Amgen trading up between 2 percent and 5 percent. Caterpillar’s 1.9 percent fall and General Electric’s 1.1 percent fall dragged on industrials. Adobe Systems was up 3.4 percent after the software forecast current-quarter above analysts’ estimates.

In Bond Markets the U.S. Treasury yield curve held near 10-year lows on Wednesday as investors evaluated the impact of hawkish Federal Reserve policy on the economy at the same time inflation measures are deteriorating. Five-year note yields, which are highly sensitive to rate policy, rose to a four-week high of 1.80 percent on Tuesday. They last traded at 1.78 percent. Thirty-year bond yields, which are largely driven by future expectations of growth and inflation, meanwhile fell to 2.72 percent on Wednesday, the lowest since Nov. 9.