European Open Market Briefing – 01/06/2017 – by A Lakhanpal

In Asian Equity Markets  equities saw mixed performance with the Nikkei 225 supported by domestic data while soft Caixin PMI weighed on the Shanghai Comp. Japan’s Nikkei share average gained on Thursday, snapping a four-day losing run, lifted by upbeat domestic data and a weaker yen. The broader Topix climbed 1.1 percent to 1,586.14 and the JPX-Nikkei Index 400 added 1.2 percent to 14,142.82. Chinese shares fell as much as 0.5 percent after a private survey showed the country’s manufacturing activity contracted in May for the first time in 11 months. The findings contrasted with official data on Wednesday which suggested growth remained steady. South Korea’s KOSPI fell 0.1 percent.

In Currency Markets the dollar fell broadly on Wednesday, sliding to two-week lows against the yen and a more than one-week trough versus the euro amid growing political tension in Washington. The greenback in May posted its worst monthly performance against the euro in more than a year, even as the European Central Bank committed to keep its stimulus plan in the region. Against a basket of major currencies, the dollar ended the month with its largest monthly percentage loss since January. In China, the yuan surged to a more than six-month high against the dollar on views the Chinese central bank is now less inclined to markedly weaken its currency against the greenback.

In Commodities Markets oil futures rose on Thursday from a three-week low touched the previous session, buoyed by expectations the United States could pull out of a global climate accord and by a report that showed U.S. crude stockpiles had fallen more than expected. Trump said he would announce later on Thursday a decision on whether to keep the United States in a global pact to fight climate change, as a source close to the matter said he was preparing to pull out of the Paris agreement. U.S. West Texas Intermediate crude futures were up 40 cents, or 0.8 percent, $48.72 a barrel. They dropped $1.34, or 2.7 percent, in the previous session to settle at $48.32 per barrel, the lowest close since May 12.

In US Equity Markets stocks were down on Wednesday as financials fell after JPMorgan and Bank of America hinted at revenue weakness in the current quarter and oil prices fell to a three-week low. JPMorgan blamed lower volatility for the decline in trading revenue, while Bank of America said trading revenue in the second quarter was on track to be 10-12 percent lower than last year. JPMorgan was down 2 percent on Wednesday. Goldman Sachs fell 3 percent and was the biggest drag on the Dow. Bank of America was down 2.5 percent. Seven of the 11 major S&P sectors were lower, with the financial index’s 1.1 percent fall leading the decliners. S&P 500 was down 0.21 percent, at 2,407.81 and the Nasdaq Composite index was down or 0.26 percent, at 6,186.75.

In Bond Markets Japanese government bond prices were mostly steady on Thursday, supported by a firm 10-year auction, but confined to a tight range as Tokyo stocks were on track to rise for the first time in five days. The benchmark 10-year JGB yield was unchanged at 0.040 percent. June 10-year JGB futures inched up 0.03 points to 150.70, drawing early support from an overnight rise by U.S. Treasuries. The bid-to-cover ratio, a gauge of demand, at Thursday’s 2.3 trillion yen ($20.73 billion) 10-year sale remained at a relatively high 3.64, from 3.76 at the previous auction in May.