European Close Market Briefing – 01/12/2017 – by Arjun Lakhanpal

In European Equity Markets financial stocks wilted after a delayed vote on tax reform in the U.S. deflated a rally in the sector, driving regional benchmarks to start December with a decrease. Euro zone stocks fell 0.6 percent while Britain’s FTSE, which has suffered from a strong sterling this week, slid 0.1 percent. Healthcare stocks outperformed thanks to a Morgan Stanley upgrade boosting UCB by 3.3 percent while Novo Nordisk , flagged as one of the strategists’ favourites in the pharma space, gained 2.8 percent. British pharma company Indivior also shot up 11.7 percent after its opioid addiction drug got approved by the U.S. Food and Drug Administration.

In Currency Markets the greenback edged higher against a basket of currencies on Friday on growing optimism that U.S. Senate Republicans would be able to round up enough votes to pass a tax overhaul bill. The dollar index was up 0.11 percent at 93.148. The single currency was down 0.33 percent to $1.1863. Sterling fell from a two-month high against the dollar, getting only a temporary boost from better-than-expected UK manufacturing data, as investors fretted about Britain reaching a deal with the EU over the Irish border. The Canadian dollar posted its biggest gain in nearly three months against its U.S. counterpart after stronger-than-expected domestic jobs data fueled expectations for further Bank of Canada interest rate hikes early next year.

In Commodities Markets  oil climbed on Friday, approaching its highest level since the summer of 2015 a day after OPEC and other major producers agreed to continue reining in output until the end of 2018 to try to reduce the global oil glut and boost prices. Brent futures were trading at $64.17 a barrel, with the new front month February up 0.9 percent, from where the January contract expired on Thursday. U.S. West Texas Intermediate crude was up 2.3 percent, at $58.73.  Spot gold was up 0.1 percent at $1,275.81 an ounce. Silver rose 0.1 percent at $16.43 after matching an Oct. 6 low of $16.30 an ounce in the previous session. Palladium rose 0.5 percent to $1,011.72 and platinum was up 0.1 percent at $941.80 an ounce.

In US Equity Markets  stocks fell on Friday after ABC News reported former national security adviser Michael Flynn was prepared to tell investigators that Donald Trump directed him to make contact with Russians during last year’s presidential elections. The Dow Jones industrial average was down 0.61 percent, at 24,125.25, the S&P 500 was down 0.67 percent, at 2,629.73 and the Nasdaq Composite was down 0.89 percent, at 6,812.69. Shares of General Motors fell 1.5 percent after the car maker reported monthly sales in the U.S. fell by 2.9 percent, with declines in all brands. Ford Motors shares fell 0.8 percent. Energy shares also attracted investors. Halliburton Co Inc shares rose 3 percent, while Schlumberger NV rose 2.2 percent.

In Bond Markets  U.S. Treasury yields fell on Friday as the likelihood of a wide-ranging tax cut passing the U.S. Senate seemed more in doubt as Senate Republicans grappled with bringing down the cost of the bill. The tax cut, supported by President Donald Trump, is expected to boost growth and inflation, driving down the value of already held bonds. Benchmark 10-year Treasury notes rose 6/32 in price to yield 2.39 percent. The yield curve flattened with the spread between 5- and 30-year maturities sinking to its lowest since Nov. 22.