European Open Market Briefing – 04/12/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index edged lower on Monday morning with weakness in large-cap stocks such as Fanuc and SoftBank taking a toll, offsetting gains in retail stocks which rose on strong monthly sales. The Nikkei fell 0.2 percent, to 22,769.64 in midmorning trade. The broader Topix fell 0.1 percent to 1,794.04. MSCI’s broadest index of Asia-Pacific stocks outside Japan hovering near a one-month trough on fears U.S. policy tightening could suck liquidity from emerging markets and derail global growth. China’s CSI 300 index and SSE Composite were down 0.2 percent each, while Australian stocks lost 0.1 percent.

In Currency Markets the dollar was broadly higher on Monday, reaching a 2-1/2-week peak against the yen, lifted after the U.S. Senate approved a tax overhaul at the weekend. The dollar was on the front foot, up 0.4 percent at 112.735 yen after rising to 112.985, its highest since Nov. 17. The euro fell 0.25 percent to $1.1871, while the dollar index against a basket of six major currencies added 0.25 percent to 93.110. Sterling was 0.05 percent lower at $1.3472 but still in reach of a two-month high of $1.3550 scaled on Friday. The Australian dollar lost 0.1 percent to $0.7602 and the New Zealand dollar was down 0.4 percent at $0.6863.

In Commodities Markets oil fell on Monday after U.S. shale drillers added more rigs last week, but prices still held close to their highest since mid-2015, supported by an extension of output cuts agreed last week by OPEC and other producers. Drillers in the United States added two oil rigs in the week to Dec. 1, bringing the total count up to 749, highest since September, energy services firm Baker Hughes said in its closely followed report late on Friday. U.S. West Texas Intermediate was down 0.8 percent, at $57.90 a barrel. Brent futures were down 0.6 percent, at $63.34 a barrel.  Spot gold was down 0.5 percent at $1,274.21 an ounce and silver was down 0.4 percent at $16.37 an ounce.

In US Equity Markets stocks  fell on Friday, whipsawed by developments with a probe into Russia’s alleged involvement in the U.S. election as well as with progress on a tax bill in Congress. Major indexes ended lower after an ABC News report that former national security adviser Michael Flynn was prepared to testify that before taking office President Donald Trump had directed him to make contact with Russians.  The Dow Jones Industrial Average fell 0.17 percent, to 24,231.59, the S&P 500 lost 0.20 percent, to 2,642.22 and the Nasdaq Composite fell 0.38 percent, to 6,847.59. Energy was the best-performing sector, rising 0.8 percent.

In Bond Markets  Japanese government bond prices fell on Monday, taking cues from a fall in U.S. Treasuries after the U.S. Senate approved a tax overhaul during the weekend in a major step for President Donald Trump’s tax cut plans. The 10-year JGB yield rose 0.5 basis point to 0.035 percent.  The price of the benchmark 10-year JGB futures fell 0.09 point to 150.93. The 20-year yield rose 1.0 basis point to 0.580 percent while the 30-year bond yield also ticked up 1.0 basis point to 0.840 percent.

Economic Calendar

• 10:30 GMT+0 UK Construction PMI