European Open Market Briefing – 27/10/2017 – by Arjun Lakhanpal

October 27, 2017 by

In Asian Equity Markets Japan’s Nikkei index rose 1 percent to a 21-year high on Friday, led by banking shares as U.S. yields remained high and by tech shares after their U.S. counterparts posted strong earnings. The Nikkei rose 0.9 percent to 21,937.82 points by midmorning, after hitting as high as 21,968.75, its strongest level since mid-1996. The broader Topix gained 0.7 percent to 1,766.62. The MSCI’s broadest index of Asia-Pacific stocks outside Japan gained 0.3 percent, with Hong Kong shares leading gains. Australia’s S&P/ASX200 fell about 0.6 percent.

In Currency Markets the dollar stood tall on Friday, on track for weekly gains, while the euro fell to three-month lows after the European Central Bank extended its bond purchases and reduced the chances that it would hike interest rates in 2018. The euro was down 0.15 percent at $1.1633 after touching $1.1624, its lowest level since July 26. It was down 1.3 percent for the week. The dollar gained 0.15 percent to 114.155 yen, within sight of this week’s three-month high of 114.245 touched on Wednesday. Sterling lost 0.3 percent to $1.3124,with investors focussed on whether the Bank of England will proceed with its first interest rate increase in more than a decade after its next meeting on Nov. 2.

In Commodities Markets  oil prices inched higher on Friday, with Brent crude approaching $60 a barrel amid tightening market expectations, buoyed by comments from Saudi Arabia’s Crown Prince backing the extension of OPEC-led output cuts. International benchmark Brent crude futures were up 0.17 percent, at $59.40 a barrel. U.S. West Texas Intermediate crude futures were at $52.64 per barrel, virtually unchanged from their last close, but up by a quarter from their June 2017 low. U.S. crude production rose by 1.1 million bpd to 9.5 million bpd in the week ended Oct. 20, according to U.S. Energy Information Administration (EIA) data. U.S. gold futures for December delivery fell 0.2 percent to $1,267.50 per ounce.

In US Equity Markets  the Dow and S&P 500 advanced on Thursday after a round of positive corporate earnings announcements, but gains were curbed and the Nasdaq lost ground on a decline in the healthcare sector. The Dow gained 0.13 percent, to 2,560.41 and the Nasdaq Composite fell 0.11 percent, to 6,556.77. The healthcare sector, off 1.03 percent, held gains in check, led lower by a 16.4-percent plunge in Celgene. The company reported lower-than-expected sales for its psoriasis drug Otezla and lowered its overall 2020 sales outlook. DowDuPont was up 2.8 percent as the biggest boost to the S&P 500. It forecast third-quarter profit well above Wall Street’s expectations ahead of the combined company’s first earnings report next week.

In Bond Markets Japanese government bond prices fell on Friday as the market took cues from an overnight retreat by U.S. Treasuries and stronger equities, although the Bank of Japan’s regular debt-buying operation limited the losses. The benchmark 10-year yield and the 20-year yield rose 0.5 basis point each to 0.070 percent and 0.600 percent, respectively. Treasury yields inched higher on Thursday, undermined by a soft auction of U.S. 7-year notes which saw demand at its weakest since August last year.

Economic Calendar

  • 13:30 GMT+1 US Advance GDP q/q