European Open Market Briefing – 02/11/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index extended its strong rally to top a new 21-year peak on Thursday morning, with the mining sector getting a boost while buyers continued to pile into companies such as Honda Motor and Sony on robust earnings prospects. The Nikkei rose 0.5 percent to 22,527.07 in early deals, the highest level since July 1996, trimming those gains to stand flat at 22,429.30 in mid-morning trade. The broader Topix gained 0.2 percent to 1,790.61. MSCI’s broadest index of Asia-Pacific stocks outside Japan added 0.2 percent, climbing to its highest levels since November 2007. In Greater China, the Shanghai Composite fell 0.58 percent and the Hang Seng Index lost 0.15 percent.

In Currency Markets the dollar pulled back from a 3-1/2-month high versus the yen and also fell back against the euro on Thursday, sagging ahead of a U.S. tax bill that will be unveiled after a one-day delay. The dollar fell 0.2 percent to 113.935 yen. The euro was 0.3 percent higher at $1.1651. Sterling nudged up 0.25 percent to $1.3280 ahead of a Bank of England policy decision. Against the euro, the pound was at 87.74 pence after advancing to 87.33 pence overnight, its strongest since mid-June. The BoE is widely expected to raise interest rates for the first time since July 2007, and investors will focus on the degree of unity among policymakers as they gauge the likelihood of further increases. The kiwi was up 0.6 percent at $0.6926.

In Commodities Markets  oil prices held steady on Thursday as U.S. crude inventories fell despite a rise in production, while outside the United States an OPEC-led supply cut continued to tighten the market.  Brent futures were at $60.56 per barrel, up 0.1 percent from their last close. U.S. West Texas Intermediate crude was at $54.30 a barrel, unchanged from the last settlement, but still some 30 percent above its 2017-low in June. U.S. commercial crude oil inventories fell by 2.4 million barrels in the week to Oct. 27 to 454.9 million barrels, according to data from the Energy Information Administration (EIA) on Wednesday.  Spot gold was up 0.5 percent to $1,279.31 per ounce, while silver prices rose 0.2 percent to $17.15 per ounce.

In US Equity Markets stocks posted modest gains on Wednesday after the U.S. Federal Reserve kept interest rates unchanged and gave encouraging comments about the economy. The Dow Jones Industrial Average rose 0.25 percent, to 23,435.01, the S&P 500 gained 0.16 percent, to 2,579.36 and the Nasdaq Composite lost 0.17 percent, to 6,716.53. After the market closed, Facebook shares were down 1.7 percent in volatile trading after the social media company’s quarterly report. Estee Lauder shares rose 9.2 percent after the cosmetics maker forecast holiday-quarter sales ahead of market expectations. U.S. Steel shares rose 7.8 percent after the company’s quarterly report.

In Bond Markets Japanese government bond prices were little changed on Thursday as a wait-and-see mood prevailed ahead of key events pertaining to U.S. fiscal and monetary policy. The benchmark 10-year JGB yield stood flat at 0.055 percent and the 20-year yield was also unchanged, at 0.585 percent. Benchmark 10-year U.S. note yields were at 2.361 percent in Asian trading, compared to their U.S. close of 2.376 percent on Wednesday, when they fell as low as 2.349 percent.

Economic Calendar

• 09:30 GMT+0 UK Construction PMI
• 13:00 GMT+0 UK BOE Inflation Report
• 13:00 GMT+0 UK MPC Official Bank Rate Votes
• 13:00 GMT+0 UK Monetary Policy Summary
• 13:00 GMT+0 UK Official Bank Rate
• 13:30 GMT+0 UK BOE Gov Carney Speaks
• 13:30 GMT+0 US Unemployment Claims