European Open Market Briefing – 26/05/2017 – by Arjun Lakhanpal

May 26, 2017 by

In Asian Equity Markets Japan’s Nikkei index remained solidly on track for a winning week on Friday, underpinned by record closing highs on Wall Street even as a firmer yen put a damper on sentiment. The Nikkei was down 0.3 percent at 19,753.42 in morning trade, but was still up 0.8 percent for the week. MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.2 percent, shrinking its weekly gain to 1.4 percent.  Australia’s benchmark lost 0.75 percent, poised for a 0.3 percent weekly rise. China’s CSI 300 was flat, heading for a 2.4 percent increase for the week. Hong Kong’s Hang Seng advanced about 0.1 percent, extending its weekly gain to 1.85 percent.

In Currency Markets Sterling fell on Friday after a poll showed a narrowing lead for British Prime Minister Theresa May over her opposition ahead of elections next month, while weakness in oil prices dragged on commodity-linked currencies. Sterling fell 0.5 percent to $1.2884, pulling further away from its May 18 peak of $1.3048. Against the yen, the dollar eased 0.3 percent to 111.51 yen and the euro eased 0.1 percent to $1.1200, having backed away from a 6-1/2 month high of $1.1268 set this week.  The Canadian dollar was last trading at C$1.3488 per U.S. dollar, down from a five-week high of C$1.3388 touched at one point on Thursday. The Australian dollar fell 0.3 percent to $0.7431.

In Commodities Markets oil extended falls on Friday after tumbling in the previous session when OPEC and allied producers extended output cuts but disappointed investors betting on longer or larger supply curbs. At Thursday’s meeting in Vienna, the OPEC and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day until the end of the first quarter of 2018. The initial agreement would have expired in June this year. Brent crude futures were at $51.26 per barrel, down 0.4 percent, from their last close. U.S. West Texas Intermediate crude futures were back below $50, at $48.61, down 0.6 percent. Gold rose 0.2 percent to $1,257.71 an ounce.

In US Equity Markets  the S&P 500 and Nasdaq hit record closing highs on Thursday, with the market propped up by gains in the consumer discretionary sector after strong reports from Best Buy and other retailers. The Dow Jones Industrial Average rose 0.34 percent, to 21,082.95, the S&P 500 gained 0.44 percent, to 2,415.07 and the Nasdaq Composite added 0.69 percent, to 6,205.26. Losing ground were shares of General Motors, down 1.8 percent. GM was accused in a lawsuit of rigging hundreds of thousands of diesel trucks with devices, similar to those used by Volkswagen AG, to ensure they pass emissions tests.

In Bond Markets U.S. Treasury yields fell slightly on Thursday on doubts whether the Federal Reserve would raise interest rates more than once by the end of 2017 as it signaled it is preparing to shrink its $4.5 trillion balance sheet later this year. The benchmark 10-year Treasury yield was 2.254 percent, down 1 basis point from late on Wednesday. It has bounced in a narrow 7 basis point range so far this week.

Economic Calendar

  • 13:30 GMT+1 US Core Durable Goods Orders m/m
  • 13:30 GMT+1 US Prelim GDP q/q