European Close Market Briefing – 31/10/2017 – by Arjun Lakhanpal

In European Equity Markets stocks held at five-month highs on Tuesday, ending October with a 1.8 percent monthly gain, the second in a row, as third-quarter data fueled confidence in the resilience of equity markets. The pan-European STOXX 600 index closed 0.4 percent with most bourses and sectors ending in positive territory as fresh data showed the euro zone grew faster than expected last quarter and unemployment fell to its lowest in almost nine years. BNP Paribas lost 2.7 percent after its results showed a disappointing performance in its markets business. Early trading was lifted by heavyweight oil major BP, whose shares jumped more than 3 percent to their highest level since July 2014 after its third-quarter profit beat expectations and it announced a share buy-back program.

In Currency Markets the dollar edged higher on Tuesday, underpinned by solid U.S. data, and headed toward its strongest monthly performance since November 2016. The greenback jumped against the Canadian dollar after the concurrent release of U.S. and Canadian data showing solid labor costs for the United States and disappointing growth and inflation readings for its northern neighbor. The euro rose 0.04 percent to $1.1655, while sterling added 0.55 percent to $1.3280. The dollar was last up 0.25 percent against the yen to 113.44 yen.The Bank of Japan kept its monetary policy steady on Tuesday, as widely expected, while slightly lowering its inflation forecast for the current fiscal year. The dollar index rose by 0.06 percent to 94.44.

In Commodities Markets oil prices were steady to slightly firmer on Tuesday after a week of gains as the prospect of increasing U.S. exports dampened bullish sentiment that has driven Brent crude to more than two-year highs above $60 per barrel.  Brent was up 0.5 percent at $61.18 a barrel, close to its July 2015 highs reached earlier this week, and up around 37 percent from its 2017 lows hit in June. U.S. West Texas Intermediate crude was 0.1 percent higher at $54.21, still near its highest since February and close to its highest for more than two years. Spot gold fell by 0.5 percent to $1,269.69 an ounce. Among other precious metals, silver fell 0.8 percent to $16.69, platinum lost 0.5 percent to $916.40 and palladium climbed 1.5 percent to $978.50.

In US Equity Markets upbeat earnings from consumer companies Mondelez and Kellogg put the benchmark S&P index on track for its best monthly gains since February. The Dow was up 0.07 percent, at 23,363.99, the S&P 500 was up 0.11 percent, at 2,575.73 and the Nasdaq Composite was up 0.37 percent, at 6,724.06. Mondelez jumped 5.5 percent after the Oreo cookie maker reported better-than-expected quarterly profit and revenue, while Kellogg rose 6.5 percent following its first quarterly sales increase in more than two years.  Pfizer’s shares fell 1.22 percent despite the drugmaker’s profit beat and upbeat forecast. Under Armour Inc lost about 15 percent after the company slashed 2017 forecasts and reported its first quarterly fall in revenue since going public.

In Bond Markets U.S. Treasury prices were steady on Tuesday as investors awaited a busy three days that include a heavy slate of data and events that market participants expected could prompt some volatile moves. Benchmark 10-year notes were last unchanged on the day to yield 2.37 percent. Italy’s benchmark 10-year bond yield fell 2 basis points to a 10-month low at 1.82 percent on Tuesday, leaving with a 34 basis-point fall in October – its best performance since July 2015. Spanish bond yields fell to their lowest level in six weeks on Tuesday at 1.46 percent.