European Open Market Briefing – 05/12/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index fell on Tuesday morning with semiconductor equipment manufacturers’ stocks hit by weakness in U.S. tech shares overnight, undercutting gains in financial stocks as banks and brokers. The Nikkei declined 0.5 percent to 22,599.67 in mid-morning trade. The broader Topix fell 0.2 percent to 1,783.47. MSCI’s broadest index of Asia-Pacific stocks outside Japan were little changed, with a fall in semi-conductor shares offset by gains in telecom and financial shares. In Greater China, the Shanghai Composite edged up 0.05 percent and the Hang Seng Index fell 0.33 percent.

In Currency Markets  the dollar fell on Tuesday, as investors waited to see how the next step of the U.S. tax reform legislation proceeds rather than extend the rise made by the dollar at the start of the week following the U.S. Senate’s approval of the tax bill. The euro was a shade higher at $1.1874  after losing 0.3 percent overnight. The dollar nudged up to 112.550 yen, but remained well off the 2-1/2-week high of 113.090 struck on Monday. The pound was 0.1 percent lower at $1.3465 after wide swings the previous day. The Australian dollar was 0.6 percent higher at $0.7639 and the New Zealand dollar firmed 0.45 percent to $0.6890. The dollar index against a basket of six major currencies eased 0.15 percent to 93.050.

In Commodities Markets oil markets nudged higher on Tuesday, buoyed by expectations of a decrease in U.S. crude stockpiles and after last week’s deal between OPEC and other crude producers to extend output curbs. International benchmark Brent crude futures were trading up 0.1 percent, from their last close at $62.51 per barrel. U.S. West Texas Intermediate crude futures were up 0.2 percent, at $57.59 per barrel. Spot gold was nearly unchanged at $1,275.24 an ounce. Meanwhile, silver was up 0.2 percent to $16.34 an ounce. Platinum was 0.4 percent higher at $927.30 an ounce and palladium was up 0.7 percent to $998.48.

In US Equity Markets  the Dow reached a record high on Monday, with banks and retailers rising and technology companies falling as investors realigned their portfolios in hopes of benefiting from expected corporate tax cuts. The Dow rose 0.24 percent to end at 24,290.05 points, while the S&P 500 lost 0.11 percent to 2,639.44. The Nasdaq Composite fell 72.22 points to end at 6,775.37. Media stocks rose after the Financial Times reported that Twenty-first Century Fox had resumed talks to potentially sell most of its assets to Walt Disney. Disney added 4.72 percent and Fox climbed 2.80 percent.  CVS Health shares lost 4.57 percent after the company agreed to buy Aetna for $69 billion in the year’s largest corporate acquisition.

In Bond Markets  U.S. Treasury yields fell on Monday but remained higher than their levels late on Friday, boosted by increased confidence that the U.S. Congress would enact tax cut legislation after the Senate passed a bill early Saturday. The 10-year note was down 5/32 in price, yielding 2.385 percent, up 2 basis points from its Friday close but around 3.5 basis points lower than its Monday opening.

Economic Calendar

• 10:30 GMT+0 UK Services PMI
• 14:30 GMT+0 CAD Trade Balance
• 16:00 GMT+0 US ISM Non-Manufacturing PMI