European Open Market Briefing – 25/10/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index rose on Wednesday morning, on track for a record 17th day of gains as bullish Wall Street underpinned sentiment, while construction equipment makers rose after Caterpillar posted robust earnings. The Nikkei opened 0.4 percent higher, and was up 0.2 percent at 21,845.75 in midmorning trade. The broader Topix gained 0.2 percent to 1,759.62. MSCI’s broadest index of Asia-Pacific shares outside Japan shrugged off early sluggishness and rose 0.2 percent. China’s blue-chip CSI300 index rose 0.3 percent, while the Shanghai Composite Index gained 0.1 percent in early trading.

In Currency Markets the dollar held near a three-month high versus the yen on Wednesday, underpinned by reports of Republican senators’ favouring John Taylor to become the next head of the Federal Reserve, while the Aussie dollar weakened after soft inflation data. The dollar last traded at 113.77 yen, down 0.1 percent on the day, but still within sight of Monday’s peak of 114.10 yen, which was the dollar’s highest since July 11. The euro held steady at $1.1763, with the near term focus on Thursday’s European Central Bank policy meeting. The Australian dollar was last down 0.7 percent on the day at $0.7720, having touched a low of $0.7716 at one point, its weakest level since mid-July.

In Commodities Markets  oil prices were largely steady on Wednesday, hovering near a four-week high hit a day earlier after top exporter Saudi Arabia said it was determined to end a supply glut. Brent crude was up 8 cents at $58.41 a barrel, after settling on Tuesday up 1.7 percent. U.S. West Texas Intermediate crude was trading down 4 cents at $52.43. U.S. crude stocks rose by 519,000 barrels last week, industry group the American Petroleum Institute said on Tuesday.  Spot gold was down 0.2 percent at $1,273.86 an ounce. In other precious metals, silver fell 0.3 percent to $16.90 an ounce. Platinum was down 0.4 percent at $916.30 an ounce and palladium was unchanged at $962.55 an ounce.

In US Equity Markets  the Dow rallied on Tuesday, registering its biggest daily percentage gain in more than a month, as stronger-than-expected results and forecasts from companies including 3M and Caterpillar fueled optimism about economic strength. The Dow rose 0.72 percent, to end at 23,441.76, the S&P 500 gained 0.16 percent, to 2,569.13 and the Nasdaq Composite added 0.18 percent, to 6,598.43. 3M advanced 5.9 percent and Caterpillar rose 5 percent after the companies reported quarterly results and gave upbeat outlooks. Upbeat results also came from General Motors, which rose 3 percent. The No.1 U.S. automaker reported stronger-than-expected earnings, reaffirmed its full-year earnings forecast and promised to slash stocks of unsold vehicles.

In Bond Markets Japanese government bond prices fell on Wednesday, following a retreat in U.S. Treasuries, although a regular debt buying operation conducted by the Bank of Japan helped limit losses. The benchmark 10-year JGB yield and the 20-year yield each rose 0.5 basis point to 0.070 percent and 0.600 percent, respectively. The 10-year yield stood at 2.417 percent in Asian trade, up from its U.S. close of 2.406 percent on Tuesday, when it rose as high as 2.428 percent.

Economic Calendar

• 09:30 GMT+1 UK Prelim GDP q/q
• 13:30 GMT+1 US Core Durable Goods Orders m/m
• 15:00 GMT+1 CAD BOC Monetary Policy Report
• 15:00 GMT+1 CAD BOC Rate Statement
• 15:30 GMT+1 US Crude Oil Inventories
• 16:15 GMT+1 CAD BOC Press Conference