European Open Market Briefing – 18/12/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japanese stocks rose on Monday with financial and exporter stocks leading gains, offsetting weakness in construction stocks after news prosecutors raided the headquarters of at least two construction firms for alleged antitrust violations. The Nikkei index gained 1.1 percent to 22,810.56 in midmorning trade, with sentiment boosted by a strong performance on Wall Street on Friday on expectations U.S. lawmakers will pass a long-awaited tax bill. The broader Topix advanced 1.1 percent to 1,812.96. MSCI’s broadest index of Asia-Pacific stocks outside Japan gained 0.2 percent. Chinese shares eased, with Shanghai’s Composite index down 0.1 percent after opening higher. The bluechip CSI 300 also came off the day’s high to be largely unchanged.

In Currency Markets  the dollar held modest gains against its peers on Monday, having received a lift after U.S. tax reform efforts moved another step closer to ratification over the weekend. The U.S. dollar stayed above a 1-1/2 week trough against the Japanese yen, after falling 0.8 percent last week. The euro was little changed at $1.1758 after falling 0.2 percent on Friday. Sterling was largely flat at $1.3337. The Australian dollar added 0.2 percent to $0.7658. The New Zealand dollar retained its upward momentum from the previous week, when it rose 2.25 percent against the dollar. The kiwi added 0.25 percent on the day to $0.7009. The dollar index against a basket of six major currencies stood little changed at 93.890.

In Commodities Markets  oil markets were stable on Monday, hovering around Friday’s levels as a lack of conclusive market indicators prevented prices from swinging either way. U.S. WTI crude futures were at $57.33 a barrel, up 3 cents from their last settlement. Brent crude futures were at $63.24 a barrel, virtually unchanged from their last close. In the U.S., energy companies cut rigs drilling for new production for the first time in six weeks, to 747, in the week ended Dec. 15, energy services firm Baker Hughes said on Friday. Gold edged up in Asia on Monday as US tax cuts look set for passage this week and likely affecting rate hike views by the market and the Fed going forward. Gold futures for February delivery fell 0.02 percent to $1,257.20 a troy ounce.

In US Equity Markets the  three major indexes climbed to record closing highs on Friday with broad-based gains as a long-awaited bill to cut corporate tax rates looked like it would win enough support from lawmakers to pass. The Dow Jones Industrial Average rose 0.58 percent, to 24,651.74, the S&P 500 gained 0.90 percent, to 2,675.81 and the Nasdaq Composite added 1.17 percent, to 6,936.58. The S&P’s Energy index was the only one of its 11 majors in the red with a 0.03-percent decrease. Technology and Healthcare indexes led the advance with 1.24 and 1.17 percent gains, respectively. CSX lost 7.6 percent. The railroad said its Chief Executive Hunter Harrison was taking medical leave amid its controversial turnaround plan.

In Bond Markets  Greek 10-year government bonds yields hit an 11-year low on Friday, as recent upbeat economic data and a deal struck with its lenders encouraged investors to snap up Greek debt. Greece’s 10-year bond yield fell below 4.00 percent for the first time since 2006, down 21 basis points on the day. By late trading, Greek 10-year bond yields were at 3.95 percent. Italy’s 10-year bond yields, trading at 1.80 percent , looked set to end the week around 21 basis points higher, its biggest weekly jump since early July.