European Open Market Briefing – 01/11/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japanese stocks scaled a fresh 21-year high on Wednesday morning, cheered by booming profits for Japan Inc. including exporters such as Sony and Nitto Denko. The Nikkei jumped 1.2 percent to 22,295.86 in midmorning trade after reaching 22,301.42, the highest level since July 1996. The broader Topix gained 0.9 percent to 1,782.01, with all of its 33 subsectors in positive territory. MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 0.6 percent, led by 1.1 percent gains in South Korea. In Greater China, the Shanghai Composite edged up 0.18 percent and the Hang Seng Index increased 0.58 percent.

In Currency Markets the dollar edged higher on Wednesday as investors awaited the outcome of the Federal Reserve’s policy meeting for clues about future tightening, while the beleaguered New Zealand dollar came roaring back to life on strong jobs data. The New Zealand dollar stole the Asian spotlight, rising 0.9 percent to $0.6906 after touching a one-week high of $0.6915, boosted by data showing the country’s jobless rate sank more than expected to a nine-year low of 4.6 percent. The dollar added 0.2 percent to 113.85, though it remained shy of its three-month high of 114.45 yen on Friday. The euro edged down 0.1 percent to $1.1632. Sterling edged down 0.1 percent against the dollar to $1.3274, after hitting a more than two-week high of $1.3293.

In Commodities Markets  Brent crude oil prices were near two-year highs on Wednesday as OPEC has significantly improved compliance with its pledged supply cuts and Russia is also seen keeping to the deal. Brent futures were at $61.15 per barrel, up 0.34 percent, since their last close and near the $61.41 a barrel two-year high from intraday trading on Tuesday. U.S. West Texas Intermediate crude was at $54.65 a barrel, up 0.5 percent, and close to February highs.  Gold edged lower early Wednesday as the dollar firmed with investors awaiting hints on a U.S rate hike following the Federal Reserve’s two-day policy meeting. Spot gold was down 0.3 percent at $1,267.80 per ounce.

In US Equity Markets a  jump in shares of consumer companies Mondelez and Kellogg after their quarterly reports on Tuesday, along with further gains for tech stocks, helped Wall Street end October on a positive note. The Dow rose 0.12 percent, to 23,377.24, the S&P 500 gained 0.09 percent, to 2,575.26 and the Nasdaq Composite added 0.43 percent, to 6,727.67. Mondelez jumped 5.4 percent after the Oreo cookie maker reported better-than-expected profit and revenue, while Kellogg rose 6.2 percent following its first sales increase in more than two years. Under Armour lost 23.7 percent after the sportswear company slashed 2017 forecasts. Apple rose 1.4 percent to a record high after positive reviews of its much-anticipated iPhone X.

In Bond Markets Japanese government bonds mostly firmed on Wednesday, bolstered by solid demand at an auction of 10-year JGBs. The benchmark 10-year cash JGB yield edged down half a basis point to 0.060 percent, though the 10-year JGB futures contract inched down 0.02 point at 150.45 in afternoon trade. The Bank of Japan said on Tuesday that it will maintain the ranges of Japanese government bonds it intends to buy in November from its October purchase plans.

Economic Calendar

• 10:30 GMT+0 UK Manufacturing PMI
• 13:15 GMT+0 US ADP Non-Farm Employment Change
• 15:00 GMT+0 US ISM Manufacturing PMI
• 15:30 GMT+0 US Crude Oil Inventories
• 19:00 GMT+0 US FOMC Statement
• 21:15 GMT+0 CAD BOC Gov Poloz Speaks