European Open Market Briefing – 13/07/2017 – by Arjun Lakhanpal

July 13, 2017 by

In Asian Equity Markets stocks were mostly up on Thursday after US Federal Reserve Chair Janet Yellen’s cautious testimony on Wednesday in the US while markets in China got a boost from estimate-beating trade data. MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 1.2 percent to its highest since May 2015. Australia’s main index jumped 1 percent, while South Korea rose 1.1 percent to a record after its central bank kept policy easy to support consumer spending. Japan’s Nikkei was restrained by a firmer yen and managed only a 0.15 percent gain. Sentiment got another boost when China reported upbeat data on exports and imports for June, helping the blue-chip CSI300 index up 0.4 percent.

In Currency Markets the dollar fell against its peers on Thursday after Federal Reserve Chair Janet Yellen did not sound as hawkish as many had anticipated, while the Canadian dollar stood near a 13-month high after its country’s central bank hiked interest rates for the first time since 2010. The euro edged up 0.2 percent to $1.1435, inching back towards a 14-month high of $1.1489 set on Wednesday. The Canadian dollar, also boosted by a rise in crude oil prices, stood at C$1.2739 per dollar after rallying more than 1 percent to C$1.2681 overnight, its strongest since June 2016. The Aussie, which has gained about 1 percent so far this week, advanced to a 13-day high of $0.7697.

In Commodities Markets oil prices were stable on Thursday as strong demand from China eased concerns of an ongoing fuel glut. Brent crude futures were at $47.75 per barrel, up 1 cent from their last close. West Texas Intermediate crude futures were at $45.48 per barrel, down 1 cent from the previous session’s close. China imported 212 million tonnes of crude oil, or 8.55 million barrels per day (bpd), in the first six months of the year, up 13.8 percent on the same period in 2016, customs data showed on Thursday. Crude inventories fell 7.6 million barrels in the week to July 7, to 495.35 million barrels. The decline was the biggest since the week ended Sept. 4.

In US Equity Markets the Dow rose to a record high close while U.S. stocks kept their upward momentum Wednesday following Federal Reserve Chair Janet Yellen’s congressional testimony to gradually raise interest rates. The Dow Jones Industrial Average rose 0.57 percent, to close at 21,532.14, a record high. The S&P 500 gained 0.73 percent, to 2,443.25 and the Nasdaq Composite added 1.10 percent, to 6,261.17. The rate-sensitive S&P 500 real estate index was among the strongest in the benchmark index, posting a 1.3 percent gain. An index of airline stocks was up 2.3 percent after the No. 1 U.S. airline, American Airlines Group Inc, reported quarterly results that beat expectations and its shares rose 4.2 percent.

In Bond Markets Japanese government bonds strengthened on Thursday, bolstered by solid demand at a 20-year JGB sale and underpinned by lower Treasury yields after remarks by the head of the U.S. Federal Reserve were not as hawkish as some had expected. The 10-year cash JGB yield edged down half a basis point to 0.080 percent, while the September 10-year JGB futures contract was up 0.15 point at 150.03. In the superlong zone, the 20-year JGB yield was down 2.5 basis points at 0.600 percent, and the 30-year JGB yield shed 3.5 basis points to 0.855 percent. The benchmark 10-year U.S. Treasury yield stood at 2.312 percent in Asian trading, below its close on Wednesday of 2.327 percent.

Economic Calendar

  • 13:30 GMT+1 US PPI m/m
  • 13:30 GMT+1 US Unemployment Claims
  • 15:00 GMT+1 US Fed Chair Yellen Testifies