European Open Market Briefing – 14/12/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index erased earlier modest gains on Thursday to edge down, while telecommunications shares withered on news that online retailer Rakuten is weighing entry into the mobile carrier market. The Nikkei was down 0.1 percent at the end of morning trading at 22,726.76. The broader Topix was also 0.1 percent lower. The Fed’s less hawkish statements supported MSCI’s broadest index of Asia-Pacific stocks outside Japan, which rose 0.45 percent. Australian stocks added 0.1 percent and South Korea’s KOSPI climbed 0.8 percent.

In Currency Markets the dollar remained on the defensive on Thursday, having tumbled after the Federal Reserve raised interest rates as expected, but left its rate outlook for the coming years unchanged. Against the yen, the dollar inched up 0.1 percent to 112.62 yen  after sliding 0.9 percent on Wednesday and having retreated from Tuesday’s four-week high of 113.75 yen. The euro edged up 0.1 percent to $1.1836, having climbed 0.7 percent on Wednesday. Data showing a rise in Australian jobs growth in November gave a lift to the Aussie, which touched a one-month high of $0.7675, and was last up 0.4 percent on the day at $0.7665. The dollar index eased 0.1 percent to 93.372 after falling 0.7 percent on Wednesday.

In Commodities Markets  oil markets rose on Thursday, lifted by a fourth straight weekly fall in U.S. crude inventories, though climbing output capped prices well below the 2015 highs reached earlier this week. U.S. West Texas Intermediate crude futures were at $56.69 a barrel, up 0.2 percent, from their last settlement. Brent crude futures were at $62.79 a barrel, up 0.6 percent from their last close. U.S. crude oil stockpiles fell by 5.1 million barrels in the week to Dec. 8, the fourth consecutive week of decline, to 442.99 million barrels, lowest since October 2015.  Spot gold was up 0.2 percent at $1,257.51 an ounce and silver was up 0.2 percent at $16.09 an ounce, after hitting a five-month low of $15.59 in the previous session.

In US Equity Markets  the S&P 500 ended slightly lower on Wednesday pressured by the financial sector after the Fed announced a widely expected interest rate hike but kept its rate outlook for coming years even as it projected faster U.S. economic growth. The Dow rose 0.33 percent, to end at 24,585.43, the S&P 500 lost 0.05 percent, to 2,662.85 and the Nasdaq Composite added 0.2 percent, to 6,875.80. The quarter-percentage-point rise in the overnight lending rate, which marked the third hike this year, came along with an increase to the Fed’s 2018 gross domestic product growth forecast to 2.5 percent from 2.1 percent.  The consumer staples sector was the strongest of the S&P’s 11 sectors with a 0.5 percent gain.

In Bond Markets U.S. Treasury yields fell on Wednesday as a report on consumer prices in November fell short of analysts’ forecasts, reducing bets on a broad pickup in inflation and supporting the view the Federal Reserve would remain on a gradual rate-hike path. The benchmark 10-year Treasury yield was 2.344 percent, down nearly 6 basis points from Tuesday after touching a near two-week high at 2.426 percent earlier Wednesday. The two-year yield touched nine-plus year peak at 1.852 percent before retreating to 1.778 percent, down 5 basis points, while the five-year yield pulled back from a 6-1/2 year high to 2.108 percent, down 6 basis points.

Economic Calendar

• 09:30 GMT+0 CHF Libor Rate
• 09:30 GMT+0 CHF SNB Monetary Policy Assessment
• 10:00 GMT+0 CHF SNB Press Conference
• 10:30 GMT+0 UK Retail Sales m/m
• 13:00 GMT+0 UK MPC Official Bank Rate Votes
• 13:00 GMT+0 UK Monetary Policy Summary
• 13:00 GMT+0 UK Official Bank Rate
• 13:45 GMT+0 EU Minimum Bid Rate
• 14:30 GMT+0 EU ECB Press Conference
• 14:30 GMT+0 US Core Retail Sales m/m
• 14:30 GMT+0 US Retail Sales m/m
• 18:25 GMT+0 CAD BOC Gov Poloz Speaks