European Close Market Briefing – 25/10/2017 – by Arjun Lakhanpal

In European Equity Markets earnings were the main driver for stocks on Wednesday, with luxury conglomerate Kering shining after sales at Gucci rose, as benchmarks were muted as investors readied for Thursday’s European Central Bank meeting. The pan-European STOXX 600 fell 0.1 percent, while euro zone blue chips gained 0.1 percent. France’s CAC 40 rose 0.1 percent, outperforming peers thanks to strong gains from Kering. Yet another forecast-beating quarter from Gucci, with organic sales growth of 49 percent, sent Kering’s shares up 5.7 percent, also boosting luxury peer LVMH up 0.8 percent, as analysts dissected the implications for the sector.

In Currency Markets the dollar fell on Wednesday against a basket of currencies, struggling to post further gains tied to speculation the next chair of the U.S. Fed will steer policy in a more hawkish direction. The Canadian dollar fell to a 10-week low at C$1.2775 to the greenback after the Bank of Canada as expected left key overnight interest rates unchanged. Australia’s dollar tumbled almost 1 percent against its U.S. counterpart, to a 3-1/2-month low of $0.7699 after third-quarter consumer price readings fell short of forecast, reducing expectations of the country’s central bank to raise interest rates in the coming months. The dollar climbed to 114.245 yen and the euro gained 0.4 percent at $1.181 before Thursday’s European Central Bank policy meeting.

In Commodities Markets  oil prices fell on Wednesday from four-week highs after a surprising increase in crude inventories, though the market was underpinned by statements from top exporter Saudi Arabia, which said it was determined to end a three-year supply glut.  Brent crude futures decreased 17 cents to $58.16 a barrel. U.S. West Texas Intermediate crude was down 30 cents at $52.17. The U.S. Energy Information Administration reported that crude inventories rose by 856,000 barrels in the week to Oct. 20. Analysts had expected a decrease of 2.6 million barrels. Spot gold was down 0.1 percent at $1,275.54 an ounce and silver was flat at $16.94 an ounce. Platinum was unchanged at $920.30 an ounce and palladium was up 0.5 percent at $967.75 an ounce.

In US Equity Markets stocks fell on Wednesday after the latest bunch of earnings from companies, including AT&T and Boeing, failed to impress investors. The Dow Jones Industrial Average was down 0.45 percent, at 23,337.4, the S&P 500 was down 0.70 percent, at 2,551.18 and the Nasdaq Composite was down 0.96 percent, at 6,534.96.  Downbeat earnings from AT&T sent the U.S. No. 2 wireless carrier shares down 4.2 percent, dragging down the S&P 500 index. Boeing surprised investors by revealing a $329 million charge for its troubled KC-46 aerial refueling tanker program in quarterly results. Its shares lost 1.64 percent. Among gainers was Anthem, which rose 5.62 percent after reporting better-than-expected profit.

In Bond Markets U.S. long-dated Treasury yields rose to multi-month highs on Wednesday, boosted by a strong U.S. durable goods report, optimism about tax reform and the upcoming announcement of President Donald Trump’s nominee to head the Federal Reserve. In mid-morning trading, 10-year U.S. Treasury note prices were down 13/32, yielding 2.455 percent, up from Tuesday’s 2.406 percent. Germany’s 10-year bond yield hit a close-to-three-week high of 0.49 percent, up a basis point on the day and 3 bps off the day’s lows. Most other euro zone bond yields reversed early falls and were broadly higher.