European Open Market Briefing – 24/05/2017 – by Arjun Lakhanpal

May 24, 2017 by

In Asian Equity Markets Japan’s Nikkei index rose on Wednesday morning helped by exporters after the dollar gained against the yen, while financials gained ground thanks to a rise in U.S. Treasury yields. The Nikkei rose 0.4 percent to 19,698.31 in midmorning trade. The broader Topix added 0.4 percent to 1,571.80 and the JPX-Nikkei Index 400 advanced 0.4 percent to 14,022.94. MSCI’s broadest index of Asia-Pacific stocks outside Japan down 0.3 percent, despite modest gains on Wall Street overnight. Moody’s cut China’s rating by one notch to A1 from Aa3, saying it expects the financial strength of the world’s second-biggest economy will erode in coming years as growth slows and debt continues to rise.

In Currency Markets the dollar held firm on Wednesday, having rebounded from 6-1/2-month lows against its major peers helped by a rise in U.S. Treasury yields, while the yuan eased after Moody’s cut its sovereign rating on China due to concerns over the country’s rising debt. The dollar was firm at 111.795 yen after a bounce to 111.995 yen, its highest in a week. The euro was little changed at $1.1191, nudged away from a 6-1/2-month high of $1.1268 scaled the previous day. The yuan fell to 6.8901 per dollar, down by 0.1 percent, before pulling back to 6.8841 for a loss of about 0.05 percent. The Australian dollar eased slightly but reaction to the downgrade was also relatively subdued.  The Aussie was down 0.15 percent at $0.7466.

In Commodities Markets oil prices were stable on Wednesday, supported by confidence that an OPEC-led output cut aimed at tightening supply would be extended to all of 2017 and the first quarter of next year. Brent crude futures rose to $54.18 per barrel, up 3 cents from their last close. U.S. West Texas Intermediate crude futures were at $51.49, up 2 cents. Spot gold was nearly flat at $1,251.29 per ounce. Silver fell 0.6 percent to $16.93 an ounce, platinum shed 0.1 percent to $939.1 an ounce. In the previous session, silver hit its highest in over three weeks at $17.30, and platinum hit its loftiest in nearly a month. Palladium fell 0.2 percent to $768.98 per ounce.

In US Equity Markets stocks  ended higher on Tuesday after the release of President Donald Trump’s budget plan but gains were tempered by declines in consumer discretionary stocks amid weakness in auto-parts companies. The Dow Jones Industrial Average rose 0.21 percent, to 20,937.91, the S&P 500 gained 0.18 percent, to 2,398.42 and the Nasdaq Composite added 0.08 percent, to 6,138.71. Consumer discretionary was the biggest laggard with a 0.4 percent decline. The biggest drag on the consumer sector was Autozone Inc down 11.8 percent to $581.4. The auto part retailer’s quarterly results missed expectations. Advance Auto Parts fell 4.6 percent while O’Reilly Automotive fell 3.3 percent and Genuine Parts  shares fell almost 2 percent.

In Bond Markets U.S. Treasury yields rose on Tuesday as some investors pared their bond positions to make room for this week’s federal and corporate supply while others reduced their safe-haven bond holdings in favor of stocks. The benchmark 10-year Treasury yield was 2.287 percent, up three basis points from late on Monday, while the 30-year yield was more than three basis points higher at 2.949 percent.

Economic Calendar

  • 13:45 GMT+1 EU ECB President Draghi Speaks
  • 15:00 GMT+1 CAD BOC Rate Statement
  • 15:00 GMT+1 CAD Overnight Rate
  • 15:30 GMT+1 US Crude Oil Inventories
  • 19:00 GMT+1 US FOMC Meeting Minutes