European Open Market Briefing – 17/07/2017 – by Arjun Lakhanpal

July 17, 2017 by

In Asian Equity Markets stocks set a fresh two-year high on Monday, boosted by stronger-than-expected economic growth in China and bets that lacklustre U.S. data will keep the Federal Reserve cautious about the pace of further policy tightening.  MSCI’s broadest index of Asia-Pacific stocks outside Japan extended earlier gains to climb 0.4 percent after the buoyant China readings. Japanese markets were closed for a holiday. Australian stocks were 0.1 percent higher, while South Korea’s KOSPI jumped 0.4 percent. By midday in China, the CSI 300 was 0.2 percent higher, after falling as much as 2.2 percent earlier. The Shanghai Composite narrowed earlier losses of as much as 2.6 percent to trade 0.1 percent lower.

In Currency Markets the dollar huddled near a 10-month trough on Monday as the diminished risk of aggressive U.S. policy tightening sent investors piling into leveraged positions in higher yielding currencies or risky assets. The dollar was 0.1 percent higher at 112.61 yen early on Monday, after closing down 0.6 percent on Friday.  The Aussie pulled back to trade 0.2 percent lower than its Friday close at $0.7811, following a 1.3 percent rise, and the loonie was 0.1 percent weaker at C$1.2655 to the dollar, retaining most of Friday’s 0.6 percent jump. The euro fell slightly to $1.14625, but remained close to its highest in a year hit last week, after gaining 0.6 percent on Friday.

In Commodities Markets oil prices rose on Monday, supported by a slowdown in the growth of rigs looking for crude in the United States and because of strong refinery demand from China. Brent crude futures were at $49.10 per barrel, up 0.4 percent, from their last close. U.S. West Texas Intermediate crude futures were at $46.70 per barrel, up 0.3 percent. Gold gained on Monday in Asia ahead of China second quarter GDP and industrial output and retail sales figures fro June with industrial metal demand for housing and property development also in focus. Gold futures for August delivery rose 0.25 percent to $1,230.56. Copper futures gained 0.19 percent to $2.689 a pound.

In US Equity Markets  the Dow and S&P 500 hit record highs on Friday after weak economic data dulled prospects of more interest rate hikes this year. The Dow Jones Industrial Average was up 0.39 percent, to 21,637.74, the S&P 500 gained 0.47 percent, to 2,459.27, and the Nasdaq Composite  added 0.61 percent, to 6,312.47. The CBOE Volatility index closed at its lowest since December 1993. The S&P financials fell 0.5 percent, and the group was the only one of the S&P 500 sectors down on the day. Inc shares rose 0.1 percent. The company has raised flags in Washington, with a Democratic lawmaker calling for a hearing on how Amazon’s plans to buy Whole Foods Market Inc will potentially impact consumers.

In Bond Markets  U.S. Treasury yields fell to multi-week lows on Friday as benign U.S. inflation data in June and surprise fall in retail sales clouded expectations about an interest rate increase later this year. In late trading, the U.S. 10-year yield fell to 2.324 percent, from 2.348 percent late on Thursday.U.S. two-year yields slid as well, down to 1.355 percent , from Thursday’s 1.367 percent, after sliding to a three-week trough of 1.323 percent.