European Open Market Briefing – 18/09/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index ended higher on Friday and posted its biggest weekly gain in ten months as a stronger dollar saw investors buying shares of exporters, shrugging off North Korea’s ballistic missile launch that dented risk appetite in broader Asia. The Nikkei initially fell in a knee-jerk reaction at the opening, but soon rebounded and stayed in positive territory before ending 0.5 percent higher at 19,909.50. The broader Topix advanced 0.4 percent to 1,638.94 after setting a two-year high of 1,642.56 on Thursday. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9 percent to reach heights not visited since late 2007. Australia’s main index added 0.6 percent.

In Currency Markets the dollar held firm near a seven-week high versus the yen on Monday, supported by recent rises in U.S. yields, while sterling took a breather after rising last week on growing expectations that the Bank of England could raise interest rates soon. The dollar rose 0.3 percent to 111.19 yen, trading within sight of Friday’s peak at 111.33 yen, the dollar’s highest level since late July. The euro held steady at $1.1946, staying below a 2-1/2 year high of $1.2092 set earlier this month. Sterling held steady at $1.3597. On Friday, it had risen to as high as $1.3616, the strongest since June 24, 2016. Against a basket of currencies, the dollar was idling at 91.851 and still uncomfortably close to the recent 2-1/2 year trough of 91.011.

In Commodities Markets crude oil was firm on Monday and remained near multi-month highs reached late last week as the number of U.S. rigs drilling for new production fell and refineries continued to start up after getting knocked out by Hurricane Harvey. U.S. West Texas Intermediate  crude futures were at $49.89 a barrel, unchanged from their settlement last Friday and still close to the more than three-month high of $50.50 briefly reached on Thursday. Brent crude futures were at $55.67 a barrel, up 5 cents and not far off the almost five-month high of $55.99 on Thursday. Spot gold was down 0.2 percent at $1,317.00 an ounce. Silver lost 0.3 percent to $17.53 an ounce, after earlier hitting its lowest since Sept. 1. Platinum was little changed at $963.35 an ounce, while palladium gained up to 0.5 percent at $927.47.

In US Equity Markets stocks reached record highs on Friday, with the S&P 500 surpassing 2,500 points as telecommunications shares rose and technology bounced back after two days of declines. The Dow Jones Industrial Average rose 0.29 percent to end at 22,268.34 points, while the S&P 500 gained 0.18 percent to 2,500.23, records for both. The Nasdaq Composite added 0.3 percent to 6,448.47. The semiconductor index rose 1.71 percent, boosted by Nvidia’s 6.32-percent jump to a record high after Evercore ISI raised its price target on the stock. AT&T rose 2.15 percent and Verizon Communications added 1.44 percent. Along with T-Mobile, they are offering deals for the newest iPhones that are less generous than in the past.

In Bond Markets yield spreads between shorter-dated and longer-dated Treasuries contracted on Friday as traders added to bets the Federal Reserve would wait until the end of the year to raise rates and focus on its balance sheet at next week’s policy meeting. The benchmark 10-year yield was 2.201 percent, up marginally on the day. It hit a three-week peak at 2.225 percent on Thursday. The yield on two-year Treasury notes was up 1.6 basis points at 1.384 percent. The yield spread between five-year and 30-year Treasuries contracted to 96 basis points, the tightest since July 7, from 103 basis points a week earlier.

Economic Calendar

• 16:00 GMT+1 UK BOE Gov Carney Speaks