European Open Market Briefing – 04/07/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index rose on Tuesday as upbeat U.S. data lifted the dollar against the yen, but geopolitical concerns soured sentiment after North Korea launched a missile. North Korea launched the ballistic missile from its western region into the sea off its east coast, South Korea’s military said, ahead of a summit of leaders from the Group of 20 countries in Germany later this week. The Nikkei was up 0.3 percent at 20,120.98 by midmorning, trimming gains from an intraday high of 20,197.16. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.3 percent and South Korea’s KOSPI was 0.1 percent lower.

In Currency Markets the dollar steadied on Tuesday after rallying on upbeat U.S. data that boosted Treasury yields to seven-week highs, while the focus turned to the Reserve Bank of Australia’s policy decision to see if it would join a growing list of central banks adopting a hawkish tilt. The euro was effectively flat at $1.1369 after falling 0.6 percent overnight. The dollar was down 0.1 percent at 113.270 yen after going as high as 113.480 late on Monday, its loftiest since mid-May. The euro edged up to a 16-month high of 128.970 yen, sterling was at a seven-week peak of 146.84 yen and the Aussie touched 86.96 yen, its strongest since March 21. The Australian dollar was 0.1 percent higher at $0.7668.

In Commodities Markets oil prices retreated in early Asian trade on Tuesday, halting a run of eight straight days of gains on signs that a relentless rise in U.S. crude production is running out of steam. Brent crude futures fell 0.5 percent, to $49.41 per barrel. U.S. West Texas Intermediate crude futures were trading down 0.5 percent, at $46.83 a barrel. Gold prices rose in Asia on Tuesday ahead of a public holiday in the U.S. with thin trading expected. Gold futures  for August delivery rose 0.41 percent to $1224.18 a troy ounce. Overnight, gold prices fell on Monday, pressured by a sharp uptick in U.S. bond yields in the wake of upbeat manufacturing activity suggesting that U.S. economic growth remained robust.

In US Equity Markets   the S&P 500 and Dow Industrials moved higher on Monday, with the Dow hitting an intraday record as energy and bank stocks gained, but continued weakness in the technology sector pulled the Nasdaq lower. The Dow Jones Industrial Average rose 0.61 percent, to 21,479.27, the S&P 500 gained 0.23 percent, to 2,429.01 and the Nasdaq Composite lost 0.49 percent, to 6,110.06. The S&P energy index rose 2.0 percent, its best performance in nearly a month, led by gains in Exxon Mobil and Chevron. Automakers advanced, with Ford up 3.3 percent and General Motors up 1.8 percent as vehicle sales figures for June showed retail sales to consumers were relatively stable at the U.S. automakers.

In Bond Markets U.S. Treasury yields rose on Monday, with two-year yields touching their highest in more than eight years after U.S. manufacturing data boosted expectations that the Federal Reserve would raise interest rates again this year as other central banks shift toward tighter monetary policy. Benchmark 10-year yields hit a nearly seven-week high of 2.353 percent, while 30-year yields touched their highest in nearly three weeks of 2.873 percent. Five- and seven-year yields hit their highest since early May of 1.941 percent and 2.199 percent.

Economic Calendar

• 09:30 GMT+1 UK Construction PMI