European Open Market Briefing – 06/09/2017 – by Arjun Lakhanpal

September 6, 2017 by

In Asian Equity Markets Japan’s Nikkei index decreased to its lowest in more than four months on Wednesday, falling below a key technical support as risk appetite was sapped by North Korea tensions and the strengthening yen. The Nikkei was down 0.3 percent to 19,325.87 by the midday break, after getting as low as 19,254.67 – the lowest level since May 1. The broader Topix fell 0.2 percent to 1,587.51. MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.7 percent.  Australian stocks lost 0.4 percent. Shanghai lost 0.25 percent while Hong Kong’s Hang Seng retreated 1 percent.  South Korea’s KOSPI was down 0.35 percent, with auto stocks falling on concerns about their sales in China.

In Currency Markets the dollar edged down against the yen on Wednesday, pushed back toward a recent 4-1/2-month low by simmering tensions on the Korean peninsula and by comments from a Federal Reserve official about subdued U.S. inflation. The dollar fell 0.1 percent to 108.72 yen and touched a low near 108.50 yen in Asian trading. The euro was flat on the day at $1.1910, remaining below a 2-1/2-year high of $1.2070 set last week as investors looked to the European Central Bank’s policy decision on Thursday. The Canadian dollar last traded at C$1.2395 per U.S. dollar, having set a two-year high of C$1.2336 on Tuesday ahead of a Bank of Canada interest rate decision on Wednesday.

In Commodities Markets  oil prices fell on Wednesday as crude demand remained subdued due to the refinery closures that followed after Hurricane Harvey hit the U.S. Gulf coast 10 days ago. U.S. West Texas Intermediate crude futures were at $48.58 barrel, 0.2 percent, below their last settlement. Brent crude futures fell 0.4 percent, to $53.19 a barrel.  Spot gold was nearly unchanged at $1,337.94 per ounce, after touching its highest level since September 2016 in the previous session. Silver was little changed at $17.88 an ounce, while platinum fell 0.5 percent to $1,001.49. Palladium was up 0.4 percent at $961.98. Copper on the London Metal Exchange was down 0.2 percent to $6,887 a tonne.

In US Equity Markets stocks decreased on Tuesday as investors remained cautious after North Korea conducted its most powerful nuclear test over the weekend. The Dow Jones Industrial Average was down 0.45 percent, at 21,888.37 and the S&P 500 was down 0.34 percent, at 2,468.03. The Nasdaq Composite was down 0.39 percent, at 6,410.04. Nine of the 11 major S&P sectors were lower, with financial index’s 0.89 percent leading the decliners. Shares of United Technologies were down about 3 percent and were the biggest drag on the Dow after the company struck a $30 billion deal to buy avionics and interiors maker Rockwell Collins. Rockwell shares were up 1.39 percent.

In Bond Markets benchmark Japanese government bonds were mostly firm on Wednesday, taking their cues from firm U.S. Treasuries as concerns about tensions on the Korean peninsula continued to underpin fixed income markets. The 10-year cash JGB yield inched down half a basis point to 0.005 percent. In the superlong zone, the 20-year JGB yield was flat at 0.520 percent, after having earlier touched 0.515 percent, its lowest since December 2016.

Economic Calendar

  • 13:30 GMT+1 CAD Trade Balance
  • 15:00 GMT+1 CAD BOC Rate Statement
  • 15:00 GMT+1 CAD Overnight Rate
  • 15:00 GMT+1 US ISM Non-Manufacturing PMI