European Close Market Briefing – 27/10/2017 – by Arjun Lakhanpal

In European Equity Markets shares reached a five-month high overall on Friday, but Spanish stocks fell after Catalonia’s parliament declared independence. Spain’s IBEX fell 1.5 percent, making it the worst-performing major index, and the IBEX banking index fell 2.4 percent. The pan-European STOXX 600 index closed up 0.6 percent. Germany’s export-oriented DAX index rose 0.6 percent to a record high. The DAX was supported by gains in Volkswagen which rose 4.5 percent after posting results that Jefferies analysts said were “strong all around” . Gemalto rose 8.3 percent. The digital security company posted healthy results after issuing four profit warnings in the past year.

In Currency Markets the euro fell on Friday and was on track for its biggest weekly loss of the year as the European Central Bank’s decision on Thursday to prolong its bond purchases signalled its willingness to stick with an ultra-loose policy stance. The tension between Madrid and Catalonia’s secessionists also stoked selling in the single currency after the Catalan parliament on Friday declared independence from Madrid following a secret ballot. At 12:00 p.m. ET, the euro was down 0.6 percent at $1.1579, bringing its weekly loss against the dollar to 1.7 percent, which would be the biggest in 11 months. Against the yen, the common currency was 0.6 percent lower at 131.93 yen after touching its weakest level in nearly two weeks.

In Commodities Markets oil prices jumped about 2 percent on Friday, with global benchmark Brent crude rising above $60 per barrel, on support among the world’s top producers for extending a deal to rein in output and as the dollar retreated from three-month peaks. Ahead of OPEC’s policy meeting on Nov. 30, Saudi Arabia and Russia declared their support for extending an OPEC-led deal to cut supplies for another nine months, the Organization of the Petroleum Exporting Countries’ secretary general said. The pact currently runs to March 2018. For the week, Brent was 4.5 percent higher, on track for its third straight weekly gain. U.S. crude, meanwhile, was set for a 4.4 percent rise for the week, capped by rising domestic production.

In US Equity Markets the Nasdaq Composite index jumped more than 1 percent on Friday on earnings from Microsoft, Amazon and Alphabet and after Apple said demand for its latest iPhone X is “off the charts”. Microsoft advanced 7.14 percent after the world’s largest software company reported further gains from its cloud computing services. Amazon rose 10.23 percent and Google-parent Alphabet gained 5.62 percent after results. Energy stocks weighed on the S&P and the Dow. Chevron fell 3.5 percent after the oil giant’s profit missed estimates as U.S. production slipped. Merck slipped 4.42 percent after the company reported a fall in revenue due to a cyber attack and loss of market share for many of its older drugs.

In Bond Markets U.S. Treasury yields turned lower on Friday after Catalonia’s parliament declared independence from Spain, and amid reports President Donald Trump was said to be favoring Federal Reserve Governor Jay Powell to lead the U.S. central bank. The news overshadowed a report showing the world’s largest economy grew more than expected in the third quarter, showing resilience despite the impact of Hurricanes Irma and Harvey. U.S. 10-year U.S. Treasury note yields were at 2.424  percent, down from 2.454 percent late Thursday. U.S. 30-year bond yields were also down at 2.936 percen, from 2.961 percent on Thursday.