European Open Market Briefing – 01/12/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index rose for a third straight day on Friday, led by oil, steel and machinery stocks, while Sharp Corp rose after it announced a return to the bourse’s main board. The Nikkei ended 0.4 percent higher at 22,819.03 points, rising for three straight days. The broader Topix advanced 0.3 percent to 1,796.53. MSCI’s broadest index of Asia-Pacific stocks outside Japan was nearly flat on the day, after brushing a two-week low. Australia’s S&P/ASX 200 edged up 0.19 percent. In Greater China, the Shnaghai Composite fell 0.24 percent and the Hang Seng Index gained 0.04 percent.

In Currency Markets the dollar steadied against the yen on Friday, losing steam after rising to a 10-day high, as the market endured the wait for a vote on a U.S. tax reform bill. The euro was little changed at $1.1908 after gaining about 0.5 percent the previous day. The pound was a shade higher at $1.3534 after rising 0.9 percent overnight when it set a two-month high of $1.3549. The New Zealand dollar stood little changed at $0.6828 after news the country’s terms of trade hit a record high in the third quarter. The Australian dollar was 0.05 percent lower at $0.7561, headed for its sixth straight session of losses. The dollar index against a basket of six major currencies was 0.1 percent lower at 92.956.

In Commodities Markets oil futures rose on Friday after OPEC and other major producers agreed to extend their production curbs in a widely expected move aimed at ending a persistent glut in global supplies. U.S. crude futures were up 0.3 percent, at $57.57. Brent February crude futures rose 24 cents to $62.87. The OPEC and non-OPEC producers led by Russia on Thursday agreed to maintain the output cuts until the end of 2018, while also signaling a possible early exit from the deal if the market overheats.  Spot gold was flat at $1,274.34 an ounce. Silver was little-changed at $16.42 after matching an Oct. 6 low of $16.30 an ounce in the previous session.

In US Equity Markets   the S&P closed at a record high and the Dow Jones Industrial Average broke above the 24,000 mark for the first time on Thursday as investors gained confidence that the Republican party’s push for a U.S. tax overhaul would succeed. The Dow rose 1.39 percent, to 24,272.35, the S&P 500 gained 0.82 percent, to 2,647.58, and the Nasdaq Composite added 0.73 percent, to 6,873.97.  The S&P energy index was the strongest sector, rising 1.55 percent after OPEC agreed to extend oil production cuts to the end of 2018. Industrials rose 1.53 percent, helped by an almost 2 percent jump in transportation stocks, which would get a big boost from corporate tax cuts.

In Bond Markets Japanese government bond prices fell on Friday with the market tracking an overnight retreat by U.S. Treasuries. The benchmark 10-year yield rose half a basis point to 0.035 percent and the 30-year yield was 1 basis point higher at 0.830 percent. U.S. Treasury prices fell sharply on Thursday on news that Senator John McCain had endorsed the U.S. Senate tax bill, potentially easing challenges to its eventual passage in Congress.

Economic Calendar

• 10:30 GMT+0 UK Manufacturing PMI
• 14:30 GMT+0 CAD Employment Change
• 14:30 GMT+0 CAD GDP m/m
• 14:30 GMT+0 CAD Unemployment Rate
• 16:00 GMT+0 US ISM Manufacturing PMI