European Open Market Briefing – 31/10/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index fell on Tuesday, taking its cue from losses on Wall Street after a report that U.S. lawmakers are discussing more gradual corporate tax cuts rather than reducing it more aggressively. The Nikkei was down 0.4 percent at 21,933.52 at the end of morning trading. The broader Topix fell 0.4 percent to 1,763.64 and the JPX-Nikkei Index 400 fell 0.5 percent to 15,599.79. MSCI’s broadest index of Asia-Pacific stocks outside Japan was up 0.2 percent. Shanghai stocks lost 0.3 percent and Hong Kong’s Hang Seng retreated 0.35 percent. Australian stocks were effectively flat and South Korea’s KOSPI added 0.3 percent.

In Currency Markets the dollar touched a one-week low versus the yen on Tuesday as investors turned cautious following news that investigators probing Russian interference in the U.S. election had charged President Donald Trump’s former campaign manager. The dollar held steady at 113.17 yen. The euro eased 0.1 percent to $1.1635, but held above a three-month low of $1.1574 touched on Friday. Against a basket of six major currencies, the dollar was steady at 94.583, down from a three-month high of 95.150 scaled on Friday. The Aussie was down 0.1 percent on the day at $0.7677. Beijing’s crackdown on winter air pollution could curb imports of resources from Australia such as iron ore and coking coal.

In Commodities Markets  oil prices were stable early on Tuesday, supported by a tightening market due to ongoing OPEC-led efforts to cut supplies, although the prospect of rising U.S. shale output dragged. Brent crude futures, the international benchmark for oil prices, were at $60.78 per barrel. U.S. West Texas Intermediate crude futures were at $54.05 a barrel, 10 cents below their last close.  U.S. gold futures for December delivery were down 0.1 percent at $1,276.50. Among other precious metals, silver was up 0.1 percent at $16.841 an ounce. Platinum gained 0.5 percent to $920.80 an ounce, while palladium climbed 0.7 percent to $971.50 an ounce.

In US Equity Markets stocks pulled back from record-high territory on Monday, weighed down by a decrease in Merck shares and a report that U.S. lawmakers are discussing a gradual phase-in of much-anticipated corporate tax cuts. The Dow Jones Industrial Average fell 0.36 percent, to 23,348.74, the S&P 500 lost 0.32 percent, to 2,572.83 and the Nasdaq Composite fell 0.03 percent, to 6,698.96. The S&P tech sector rose 0.4 pct, following big gains on Friday in the wake of a strong batch of earnings. Apple shares gained 2.3 percent after analysts pointed to strong demand for the iPhone X. Merck shares fell 6.1 percent after a setback to its key cancer medicine. The stock was among the top drags on the S&P 500 and Dow industrials.

In Bond Markets U.S. Treasury debt yields fell on Monday on news reports that U.S. President Donald Trump is likely to appoint Federal Reserve Governor Jerome Powell, who is viewed as more dovish than other contenders, as head of the Federal Reserve. Benchmark 10-year notes gained 17/32 in price to yield 2.366 percent, down from 2.43 percent on Friday. The yield curve between five-year notes and 30-year bonds steepened as high as 90.50 basis points, up from 88.8 basis points on Friday.

Economic Calendar

• 13:30 GMT+0 CAD GDP m/m
• 15:00 GMT+0 US CB Consumer Confidence
• 20:30 GMT+0 CAD BOC Gov Poloz Speaks
• 22:45 GMT+0 NZD Employment Change q/q
• 22:45 GMT+0 NZD Unemployment Rate