European Open Market Briefing – 13/12/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index edged lower on Wednesday morning after tech stocks lost ground as they tracked their weaker U.S. counterparts, offsetting gains in the financial space. The Nikkei 225 Index fell 0.2 percent to 22,817.46 in midmorning trade while the broader Topix shed 0.1 percent to 1,814.09. MSCI’s broadest index of Asia-Pacific stocks outside Japan was up 0.1 percent. In Greater China, the Shanghai Composite fell 0.12 percent and the Hang Seng rose 0.31 percent. The Australian index, S&P/ASX 200, eased 0.13 percent.

In Currency Markets the dollar fell from a four-week high against a basket of currencies on Wednesday after a Democrat won a bitter fight for a U.S. Senate seat in deeply conservative Alabama, reducing Republicans’ already narrow Senate majority further. Against the yen, the dollar fell 0.2 percent to 113.35 yen  after having risen to a four-week high of 113.75 yen on Tuesday. The euro gained 0.15 percent to $1.1757, after fell to a three week low of $1.17175 the previous day. The British pound hovered at $1.3315, near two-week lows of $1.3303 touched on Tuesday, although the currency was briefly propped up by data showing British inflation unexpectedly hit a near six-year high in November.

In Commodities Markets  oil prices rose on Wednesday as industry data showed a larger-than-expected drawdown in U.S. crude stockpiles, while expectations for an extended shutdown of a major North Sea crude pipeline also continued to bolster markets. Brent crude was up 1 percent, at $63.98 a barrel. U.S. West Texas Intermediate crude was up 0.7 percent, at $57.56 a barrel, having settled the previous session down 85 cents. After settlement on Tuesday, industry group the American Petroleum Institute said crude stocks in the United States fell by 7.4 million barrels last week.  Spot gold was steady at $1,243.78 an ounce and silver was down 0.1 percent at $15.71 an ounce.

In US Equity Markets  the S&P 500 and the Dow industrials registered record closing highs on Tuesday with a boost from bank stocks as investors eyed a potential cut in U.S. corporate taxes and continued economic growth after strong inflation data. The Dow Jones Industrial Average rose 0.49 percent, to 24,504.8, the S&P 500 gained 0.15 percent, to 2,664.11 and the Nasdaq Composite fell 0.19 percent, to 6,862.32. The financial sector was the biggest driver with a 1-percent gain, followed by the healthcare sector, up 0.4 percent. Goldman Sachs was the biggest boost for the Dow with a 3-percent gain, followed by Boeing, which rose 2.4 percent after it announced a 20-percent dividend hike and an $18-billion share buyback authorization.

In Bond Markets  U.S. Treasury yields rose on Tuesday as stronger-than-forecast data on producer prices in November offset average demand at a $12 billion auction of 30-year bonds.  The 10-year Treasury yield was 2.407 percent, up 2.2 basis points from late on Monday, while the 30-year yield increased 1.5 basis points to 2.787 percent. Two-year yields edged up 0.8 basis point at 1.831 percent after touching 1.847 percent which was the highest since October 2008.

Economic Calendar

• 10:30 GMT+0 UK Average Earnings Index 3m/y
• 14:30 GMT+0 US CPI m/m
• 14:30 GMT+0 US Core CPI m/m
• 16:30 GMT+0 US Crude Oil Inventories
• 20:00 GMT+0 US FOMC Economic Projections
• 20:00 GMT+0 US FOMC Statement
• 20:00 GMT+0 US Federal Funds Rate
• 20:30 GMT+0 US FOMC Press Conference