European Open Market Briefing – 08/05/2017 – by Arjun Lakhanpal

May 8, 2017 by

In Asian Equity Markets Japan’s Nikkei index hit a level not seen in nearly 17 months on Monday morning as the yen stayed weak after Emmanuel Macron was elected president of France, as a business-friendly vision of European integration helped boost investor confidence. The Nikkei rose 1.8 percent to 19,804.20, the highest since December 2015. The broader Topix rose 1.9 percent to 1,579.78 and the JPX-Nikkei Index 400 advanced 1.9 percent to 14,113.77. MSCI’s broadest index of Asia-Pacific stocks outside Japan added 0.3 percent, snapping a three-day losing streak. In Australia, the S&P/ASX 200 rose 0.2 percent and South Korea’s Kospi made moderate gains of 0.21 percent.

In Currency Markets the euro pulled away from highs hit early in the Asian session on Monday as investors took profits from its gains after centrist Emmanuel Macron’s victory over the far-right Marine Le Pen in France’s presidential election.  In early Asian trading the euro rose as high as $1.1024, its highest since Nov. 9. It also jumped to a one-year high of 124.58 yen against its Japanese counterpart, and a five-month high of 1.08865 Swiss franc. It last fell 0.2 percent to $1.0975 against the dollar, and to 123.76 yen, also down 0.2 percent. The dollar was slightly lower on the day at 112.77 yen, after jumping to a seven-week high of 113.14 yen in early trade. Sterling was down 0.2 percent at $1.2956 after rising as high as $1.2990 earlier in the session.

In Commodities Markets oil prices rose on Monday as Saudi Arabia’s energy minister said an OPEC-led production cut scheduled to end in June would likely be extended to cover all of 2017, although a relentless increase in U.S. drilling capped gains. Brent crude futures were at $49.82 per barrel on Monday, up 1.47 percent, from their last close. U.S. West Texas Intermediate crude futures were at $46.85 per barrel, up 1.36 percent. Spot gold rose 0.3 percent to $1,230.88 per ounce, after touching 1,224.86 earlier in the session, its lowest since March 17. Spot silver gained 0.8 percent to $16.42 an ounce. Platinum was 0.4 percent higher at $914.65, and palladium up about 0.1 percent at $812 per ounce.

In US Equity Markets  major U.S. stock indexes gained on Friday, with the S&P 500 ending at a record high close, as energy stocks bounced back along with oil prices and U.S. job growth rebounded. The Dow Jones Industrial Average rose 0.26 percent, to 21,006.94, the S&P 500 gained 0.41 percent, to 2,399.29 and the Nasdaq Composite added 0.42 percent, to 6,100.76.  IBM shares fell 2.5 percent after Warren Buffett said he sold about one-third of Berkshire Hathaway Inc’s stake in the company. Shares of health insurer Cigna and IT services provider Cognizant rose after their respective reports. U.S. nonfarm payrolls rose by 211,000 jobs last month after a paltry gain of 79,000 in March, and the unemployment rate fell to 4.4 percent, near a 10-year low.

In Bond Markets the U.S. Treasury yield curve flattened on Friday after jobs growth in April rebounded and the unemployment rate fell to a near 10-year low, reinforcing the view that the Federal Reserve is likely to raise interest rates again in June. Benchmark 10-year notes gained 2/32 in price to yield 2.35 percent, down from 2.36 percent on Thursday. The yield curve between two-year notes and 10-year notes flattened to 103 basis points, from 105 basis points before the data.