European Open Market Briefing – 18/10/2017 – by Arjun Lakhanpal

October 18, 2017 by

In Asian Equity Markets Japan’s Nikkei index edged up on Wednesday, getting a lift from further gains on Wall Street and as investors bet a weekend election would usher in continued political and monetary stability. The Nikkei was up 0.1 percent at 21,354.56 points at the end of morning trade, probing fresh 21-year highs and on track for its 12th straight winning session. The broader Topix was slightly higher, up 0.03 percent at 1,723.82. MSCI’s broadest index of Asia-Pacific stocks outside Japan edged up 0.1 percent, near their highest since late 2007, while Australia rose 0.2 percent. The blue-chip CSI300 index was up 0.3 percent, while Shanghai stocks added 0.1 percent.

In Currency Markets the dollar held an upper hand against other major currencies on Wednesday as investors weigh the possibility that U.S. President Donald Trump will choose a more hawkish Federal Reserve chief with than the current chair, Janet Yellen. As the dollar gained broadly, the euro fell to $1.1770, little changed in early Asian Wednesday trade but down 0.5 percent so far on the week.  The dollar fetched 112.22 yen, little changed on the day. The British pound wallowed at $1.3188 having fallen 0.5 percent on Tuesday after comments by Bank of England policymakers were interpreted by markets as dovish. The dollar index stood at 93.475, extending its rebound from Friday’s 2 1/2-week low of 92.749.

In Commodities Markets  oil prices rose on Wednesday, lifted by a fall in U.S. crude inventories and concerns that tensions in the Middle East could disrupt supplies. Brent crude futures were at $58.27 per barrel, up 0.7 percent from their last close – and a third above mid-year levels. U.S. West Texas Intermediate crude futures were at $52.13 per barrel, up 0.5 percent, and almost a quarter above mid-June levels. U.S. crude inventories fell by 7.1 million barrels in the week to Oct. 13 to 461.4 million barrels, the American Petroleum Institute said late on Tuesday.  Spot gold was up 0.1 percent at $1,286.11 an ounce and silver rose 0.4 percent to $17.05 an ounce. Platinum rose 0.3 percent to $932.60 an ounce, while palladium was 0.5 percent higher at $983.00 an ounce.

In US Equity Markets  the Dow Jones Industrial Average briefly broke above the 23,000-point mark for the first time on Tuesday, driven by strong earnings from UnitedHealth and Johnson & Johnson, but finished the session just below that milestone. The Dow rose 0.18 percent, to end at 22,997.44. The S&P 500 gained 0.07 percent, to 2,559.36 and the Nasdaq Composite fell 0.01 percent, to 6,623.66. Shares of the largest U.S. health insurer UnitedHealth  touched a life intraday high and closed up 5.5 percent after the company reported a stronger-than-expected profit and raised its full-year earnings forecast. Johnson & Johnson, up 3.4 percent, also posted better-than-expected results and raised its forecast, leading a 1.3 percent gain in the S&P healthcare sector.

In Bond Markets the U.S. Treasury yield curve flattened on Tuesday as 2-year yields rose to their highest level since November 2008 and yields on longer-dated maturities declined. Yields on 5-year notes touched their highest level since Oct. 6 while 30-year yields fell to the lowest since Sept. 27. Yields on two-year U.S. Treasury paper have hit their highest since November 2008 amid speculation President Trump could chose a more hawkish leader to replace Federal Reserve Chair Janet Yellen.

Economic Calendar

  • 09:10 GMT+1 EU ECB President Draghi Speaks
  • 09:30 GMT+1 UK Average Earnings Index 3m/y
  • 13:30 GMT+1 US Building Permits
  • 15:30 GMT+1 US Crude Oil Inventories