European Close Market Briefing – 22/09/2017 – by Arjun Lakhanpal

In European Equity Markets stocks steadied on Friday, as tensions over North Korea kept some investors on the sidelines ahead of a national election in Germany that conservative Chancellor Angela Merkel looks set to win. The pan-European STOXX 600 index closed 0.1 percent higher. Britain’s FTSE 100 outperformed with a 0.6 percent gain, buoyed by a fall in sterling following a closely-watched speech on Brexit by Prime Minister Theresa May. French cosmetics giant L’Oreal was a notable gainer on speculation about ownership changes, rising as much as 6.7 percent after billionaire Liliane Bettencourt, whose family founded the firm and still owns the largest stake in it, died. Deutsche Boerse lost more than 4 percent after the country’s financial regulator took a critical view of a settlement between the exchange and Frankfurt prosecutors in an insider trading case.

In Currency Markets the dollar fell against the yen on Friday, with tensions simmering on the Korean peninsula and as the boost from heightened expectations of a U.S. interest rate hike in December faded. The dollar was down 0.39 percent at 112.02 yen, on pace to snap a five-day winning streak. The euro inched up 0.23 percent to $1.1966, with traders not seeing Sunday’s German elections as a source of risk. Chancellor Angela Merkel is widely expected to win a fourth term in power. Sterling was down 0.45 percent against the greenback at $1.3517, after falling as low as 1.3490. The dollar index, which tracks the greenback against six major currencies, was down 0.25 percent to 92.03.

In Commodities Markets  oil prices were mixed on Friday, hovering close to their highest levels in months, as major producers may wait until January before deciding whether to extend their output curbs beyond the first quarter.  Brent crude was up 20 cents a barrel, or 0.4 percent, at $56.63 a barrel, after hitting $56.87, its highest since March. U.S. West Texas Intermediate crude fell 5 cents a barrel to $50.50 a barrel, within a few cents of its May peak. Spot gold was up 0.3 percent at $1,294.60 an ounce, having hit a four-week low of $1,287.61 in the previous session. Silver was flat at $16.94 an ounce, while platinum was up 0.6 percent to $929.50. Palladium rose 0.4 percent to $915 an ounce and was set for a third straight weekly loss.

In US Equity Markets stocks were little changed in late morning trading on Friday as losses in financial and healthcare stocks were offset by gains in energy and industrial stocks. The Dow Jones Industrial Average was down 0.14 percent, at 22,328.75, the S&P 500 was down 0.10 percent, at 2,497.99 and the Nasdaq Composite was down 0.17 percent, at 6,411.51. Six of the 11 major S&P sectors were higher, led 0.62 percent jump in the telecom services index, followed by a 0.56 percent rise in the energy index. Apple fell 1.44 percent as the launch of iPhone 8 kicked off in a less lively mood in Asia versus previous debuts. United States Steel lost 5.19 percent after Cowen downgraded the stock to “underperform” from “market perform”.

In Bond Markets U.S. Treasury prices gained on Friday on concerns about conflict with North Korea, which said it might test a hydrogen bomb over the Pacific Ocean, and as investors closed positions before the weekend. Benchmark 10-year notes gained 9/32 in price to yield 2.25 percent, down from 2.28 percent on Thursday. On Friday, Germany’s 10-year government bond yield was about a basis point higher at 0.46 percent, down from a seven-week high hit on Thursday.