European Close Market Briefing – 31/05/2017 – by Arjun Lakhanpal

May 31, 2017 by

In European Equity Markets stocks posted their fourth straight month of gains on Wednesday though fresh political worries and the lack of new catalysts following a surprisingly strong earnings season spurred investors to lock in some profits in banks and commodities-related stocks. The pan-European STOXX 600 index ended the day little changed and up 0.9 percent in May, the slimmest rise since the streak of monthly gains began in February. In Britain, the FTSE ended the day little changed but posted its best month of the year, helped by a weaker pound. Deutsche Bank shares ended the day down more than 3.4 percent as warnings from U.S. bellwethers JPMorgan and Bank of America on revenue weakness hit European peers.

In Currency Markets the dollar fell broadly on Wednesday, sliding to two-week lows against the yen and a one-week trough versus the euro amid growing political tension in Washington. In late morning trade, the dollar was down 0.2 percent at 110.51 yen after earlier falling to two-week lows.  The euro was up 0.6 percent at $1.1247, while the dollar index fell to 96.98. Britain’s pound, meanwhile, recovered from a half a percent decrease on Wednesday after a poll showed the country’s ruling Conservative party still in the lead, overriding a previous projection of a hung parliament in elections next week.  Sterling was up 0.4 percent at $1.2913 recovering from a low of $1.2770 hit in London trading.

In Commodities Markets oil prices fell to a three-week low on Wednesday on news that Libyan output was recovering from an oilfield technical issue, fuelling concerns that OPEC-led output cuts to reduce global inventories were being undermined by producers outside the deal. Benchmark Brent oil was down 3.1 percent, at $50.21 a barrel, after earlier touching $50.12 a barrel, the weakest since May 10. U.S. light crude traded at $48.31, down 2.7 percent. Spot gold edged up 0.4 percent to $1,267.6 per ounce. Silver fell 0.2 percent to $17.32 an ounce, though it was 0.8 percent higher for the month. Platinum was up 1.2 percent at $945.5 an ounce and palladium was up 1.6 percent at $817.9 an ounce.

In US Equity Markets  stocks were down on Wednesday as financial stocks fell after JPMorgan and Bank of America hinted at revenue weakness in the current quarter. The Dow was down 0.22 percent, at 20,983.3, the S&P 500 was down 0.21 percent, at 2,407.76 and the Nasdaq Composite was down 0.44 percent, at 6,175.79.  Seven of the 11 major S&P sectors were lower, with the financial index’s 1.3 percent fall leading the decliners. JPMorgan was down 2 percent on Wednesday. Goldman Sachs fell 3 percent and Bank of America was down 2.2 percent. Shares of Michael Kors fell 9.4 percent to $32.88 after the luxury fashion retailer gave a bleak full-year forecast and said it would shut more than 100 full-price retail stores in the next two years.

In Bond Markets long-dated U.S. Treasury yields touched their lowest in more than five weeks and benchmark yields their lowest in nearly two weeks on month-end buying and U.S. housing data that fanned doubts that the Federal Reserve would raise interest rates again in 2017 beyond June. U.S. 30-year yields touched 2.866 percent, their lowest since April 21, and benchmark 10-year yields touched their lowest in 13 days of 2.198 percent. The yield on Germany’s 10-year government bond, the benchmark for the region, was up 1.5 basis points at 0.31 percent.