European Open Market Briefing – 07/11/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index jumped to a near 26-year-high on Tuesday morning, as foreign investors piled in on expectations of strong earnings from Japan Inc., while Wall Street’s strength underpinned sentiment. The Nikkei index opened lower but later gained as much as 1.0 percent to 22,775.68 in morning trade, the highest level since January 1992. The broader Topix rose 0.6 percent to 1,802.85. MSCI’s broadest index of Asia-Pacific stocks outside Japan extended early gains, rising 0.8 percent to its loftiest peak since November 2007. Australia’s S&P/ASX 200 index jumped 0.8 percent to its highest since February 2008, bolstered by strong commodities prices.

In Currency Markets the dollar sagged on Tuesday, knocked away from an eight-month highs versus the yen down as Treasury yields fell on uncertainty over whether the Republicans can pass their tax bill in a timely manner. Against the yen, the dollar nudged up 0.15 percent to 113.870 yen,  but still some distance from 114.735 struck the previous day, its highest since mid-March. The euro was steady at $1.1613 following its descent to a 10-day trough of $1.1580 overnight. The Australian dollar was little changed at $0.7692 after gaining about 0.5 percent the previous day against the broadly weaker dollar. The Canadian dollar stood at C$1.2713 per dollar following an overnight rally to a two-week high of C$1.2701.

In Commodities Markets  oil prices largely held on to gains on Tuesday after posting the biggest rise in six weeks a day earlier, buoyed by moves by Saudi Arabia’s crown prince to tighten his grip on power and rising tensions between the kingdom and Iran. U.S. West Texas Intermediate crude was down just 4 cents at $57.31 a barrel. Brent crude futures were down 5 cents at $64.22. U.S. drillers cut eight oil rigs last week, the biggest reduction since May 2016, helping to support prices.  Spot gold was down 0.2 percent at $1,279.62 per ounce. Among other precious metals, silver fell 0.6 percent to $17.13 an ounce. Platinum was down 0.5 percent at $930.10 per ounce and palladium was down 0.2 percent at $998.25 an ounce.

In US Equity Markets  stocks climbed to record highs on Monday, helped by optimism about merger activity and as investors bet that a Republican plan to cut corporate taxes would bolster earnings. The Dow inched up 0.04 percent to end at 23,548.42, while the S&P 500  gained 0.13 percent to 2,591.13. The Nasdaq Composite added 0.33 percent to 6,786.44. Twenty-First Century Fox rose 9.93 percent after CNBC reported that the film and television conglomerate has held talks to sell most of the company to media giant Walt Disney Co. Disney shares rose 2.02 percent. Advanced Micro Devices jumped 7.28 percent after a report that it plans to team up with Intel to form a personal computer chip unit. Intel ended 1.37 percent higher.

In Bond Markets Japanese government bond prices were mostly stronger on Tuesday following robust results in a liquidity-enhancing auction and overnight gains by U.S. Treasuries, although gains were limited by Tokyo shares rallying to a 26-year high. The two-year yield, five-year yield and 20-year yield declined by 0.5 basis point to minus 0.190 percent, minus 0.130 percent and 0.560 percent, respectively. The 10-year yield rose 0.5 basis point to 0.025 percent, losing some momentum after declining 3 basis points the previous day.

Economic Calendar

• 10:00 GMT+0 EU ECB President Draghi Speaks
• 18:55 GMT+0 CAD BOC Gov Poloz Speaks
• 20:30 GMT+0 US Fed Chair Yellen Speaks