European Close Market Briefing – 25/09/2017 – by Arjun Lakhanpal

September 25, 2017 by

In European Equity Markets stocks edged higher in cautious trade on Monday after German Chancellor Angela Merkel secured a fourth term but saw her party weakened by a rise in support for the far-right. Both the pan-European STOXX 600 and euro zone blue chips were 0.1 percent higher – a more moderate reaction than the currency market where the euro took a hit. French train maker Alstom rose 1.5 percent to its highest level since March 2013 after confirming on Friday it was in talks with German engineering group Siemens on a possible tie-up. Unicredit lost 0.1 percent after its deputy chairman said on Friday that the speculation about his bank wanting to take over Commerzbank was nonsense. The German bank lost 1.2 percent.

In Currency Markets the U.S. dollar rose broadly on Monday, benefiting from elections in Germany and New Zealand that left unclear outcomes about the future of governance. The euro fell after a weekend victory for German Chancellor Angela Merkel that was accompanied by a rise in support for the far right.  The euro was last down more than half a percent against both the dollar and sterling. The dollar also rose 1 percent against the New Zealand dollar following that country’s election over the weekend, which left the ruling National Party short of the necessary votes to rule without forming a coalition. The dollar gained 0.35 percent against a broad basket of currencies as investors reduced short bets against it.

In Commodities Markets oil prices hit a more than two-year high on Monday after major producers said the global market was on its way toward rebalancing, while Turkey threatened to cut oil flows from Iraq’s Kurdistan region toward its ports. The November Brent crude futures contract was up 2.5 percent, at $58.37 a barrel, its highest since July, 2015. U.S. West Texas Intermediate crude for November delivery rose 2 percent, to $51.68 a barrel, close to highs last seen in May. Spot gold was down 0.2 percent at $1,294.46 an ounce. Silver was 0.2 percent lower at $16.90 an ounce. Platinum was up 0.2 percent at $932.50 an ounce, off an eight-week low hit on Thursday, while palladium was 0.5 percent higher at $912 an ounce.

In US Equity Markets  stocks fell sharply in late morning trading on Monday after North Korea accused the United States of declaring war and a selloff in technology stocks accelerated. The Dow Jones Industrial Average was down 0.41 percent, at 22,257.21, the S&P 500 was down 0.38 percent, at 2,492.72 and the Nasdaq Composite was down 0.97 percent, at 6,364.28. Six of the 11 major S&P sectors were lower. While tech sector was the biggest laggard, the energy index was the biggest gainer, rising 0.91 percent. General Motors rose 2.36 percent after Deutsche Bank upgraded the automaker’s stock to “buy”, pointing to its autonomous vehicles, which could be ready for deployment within quarters.

In Bond Markets U.S. Treasury yields fell on Monday, holding in a tight trading range ahead of this week’s government debt supply and a speech on Tuesday from Federal Reserve Chair Janet Yellen. The yield on benchmark 10-year Treasury notes was nearly 5 basis points lower at 2.216 percent, while the 30-year bond yield was down 4 basis points at 2.752 percent. Germany’s 10-year bond yield hit an 11-day low of 0.395 percent, down 6 bps on the day in late trade on renewed jitters over North Korea.