European Open Market Briefing – 28/06/2017 – by Arjun Lakhanpal

June 28, 2017 by

In Asian Equity Markets Japanese stocks wobbled on Wednesday morning as tech shares were dragged down by falls in their U.S. counterparts overnight, while financials rallied on the back of rising U.S. yields. The Nikkei share average shed 0.2 percent to 20,181.62 in midmorning trade, while gains in banking stocks and insurers supported the broader Topix, which tacked on 0.1 percent. The JPX-Nikkei Index 400 advanced 0.2 percent to 14,422.02. MSCI’s broadest index of Asia-Pacific stocks outside Japan was down 0.4 percent, pulling further away from more than two-year highs probed earlier this week.

In Currency Markets the euro hit a 10-month high on Wednesday after the European Central Bank chief hinted the days of the ECB’s aggressive stimulus are numbered, and as the dollar was pressured after a vote on U.S. healthcare legislation was delayed. The euro edged up 0.1 percent to $1.1345, having hit a high of around $1.1355 earlier on Wednesday, its strongest level since August 2016. Against the yen, the euro eased 0.1 percent to 127.23 yen. The euro had touched a high of around 127.47 yen on Tuesday, its strongest level since April 2016. Against the yen, the dollar eased about 0.2 percent to 112.15 yen. The dollar index fell to 96.322 at one point on Wednesday, its lowest level in more than seven months. It last stood at 96.385.

In Commodities Markets oil markets were steady to lower on Wednesday after a report of rising U.S. fuel and crude inventories underscored concerns that a three-year supply glut is far from over. Brent crude futures were at $46.67 per barrel, close to their last close. U.S. West Texas Intermediate crude futures were down 0.2 percent, at $44.16 per barrel. A report by the American Petroleum Institute (API) showed that U.S. crude inventories rose by 851,000 barrels in the week to June 23 to 509.5 million, compared with analysts’ expectations for a decrease of 2.6 million barrels.  Spot gold rose 0.4 percent to $1,251.91 per ounce and spot silver gained 0.7 percent to $16.78 an ounce.

In US Equity Markets  the tech-heavy Nasdaq led a broad Wall Street decline on Tuesday with stocks falling more sharply after a healthcare bill was delayed in the U.S. Senate, raising fresh questions about President Trump’s domestic agenda. The Dow Jones Industrial Average fell 0.46 percent, to 21,310.66, the S&P 500 lost 0.81 percent, to 2,419.38 and the Nasdaq Composite lost 1.61 percent, to 6,146.62. Big tech names weighed most heavily on the S&P 500. Google parent Alphabet fell 2.5 percent after EU antitrust regulators hit the tech giant with a record $2.7-billion fine.  The healthcare sector weakened after news of the vote delay, and ended down 0.9 percent. Financials were the only sector to end in positive territory, rising 0.5 percent.

In Bond Markets U.S. Treasury yields rose on Tuesday in sympathy with European government debt weakness after European Central Bank President Mario Draghi fueled expectations that the ECB is closer to announcing a reduction of stimulus. Benchmark 10-year notes fell 18/32 in price to yield 2.20 percent, up from 2.14 percent late on Monday. The Treasury yield curve between five-year notes and 30-year bonds steepened after earlier falling to 92.70 basis points, the flattest level since late 2007.

Economic Calendar

  • 14:30 GMT+1 CAD BOC Gov Poloz Speaks
  • 14:30 GMT+1 EU ECB President Draghi Speaks
  • 14:30 GMT+1 UK BOE Gov Carney Speaks
  • 14:30 GMT+1 JPY BOJ Gov Kuroda Speaks
  • 14:30 GMT+1 US Crude Oil Inventories