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

In Asian Equity Markets Japan’s Nikkei index fell to a three-week low on Friday morning after global shares tumbled, but investors wasted no time trimming losses after the Bank Of Japan raised its purchases of government bonds in its market operations. The Nikkei fell 0.1 percent to 19,979.72 in midmorning trade, after falling to as low as 19,856.65 earlier, the lowest point since June 15. The broader Topix fell 0.2 percent to 1,613.01. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.4 percent. South Korea’s KOSPI lost 0.3 percent and Australian stocks declined 0.9 percent. Hong Kong’s Hang Seng fell 0.4 percent.

In Currency Markets the dollar gained in Asian trading on Friday, getting a leg up against the yen after the Bank of Japan increased its purchases of Japanese government bonds in a move aimed at stemming a rise in yields. The dollar extended gains against its Japanese counterpart after the BOJ’s move, rising 0.6 percent to 113.830 yen after touching a session high of 113.835 yen, its highest level since May 12. It was up 1.3 percent for the week. The euro edged down 0.1 percent on the day to $1.1412 , and was down 0.1 percent for the week. The dollar index, which tracks the greenback against a basket of six major rivals, was 0.2 percent higher on the day at 95.947, up 0.3 percent for the week.

In Commodities Markets oil prices fell by more than 1 percent early on Friday, with U.S. crude futures falling below $45 per barrel as news of a rise in U.S. production added to earlier reports that OPEC output was also on the rise. Brent crude futures were trading down 1.2 percent, at $47.52 per barrel. U.S. West Texas Intermediate crude futures were at $44.94 per barrel, down 1.3 percent. U.S. crude inventories fell by 6.3 million barrels in the week to June 30, to 502.9 million barrels, according to the U.S. Energy Information Administration (EIA). Gasoline stocks fell by 3.7 million barrels, to 237.3 million barrels. Spot gold was 0.3 percent lower at $1,220.45 an ounce. Silver was down 0.6 percent at $15.89 an ounce after momentarily falling to $14.86.

In US Equity Markets  stocks were sharply lower on Thursday after disappointing labor market data clashed with the possibility of a more hawkish Federal Reserve, while rising tensions in the Korean peninsula providing additional pressure. The Dow Jones Industrial Average fell 0.74 percent, to 21,320.04, the S&P 500 lost 0.94 percent, to 2,409.75 and the Nasdaq Composite fell 1 percent, to 6,089.46. Shares of Tesla lost 5.56 percent after the luxury electric carmaker’s Model S did not receive the top score in certain tests by the Insurance Institute for Highway Safety. General Electric lost 3.80 percent as the worst performer on the Dow after the European Commission accused the company of providing misleading information during a merger deal.

In Bond Markets U.S. Treasury yields rose on Thursday, with benchmark yields touching nearly eight-week highs, on the prospect of hawkish global central bank policy and concern that rising oil prices could spur inflationary pressures. Benchmark 10-year yields touched a nearly eight-week high of 2.391 percent before easing from that peak to last stand at 2.373 percent. The BOJ offered to buy an unlimited amount of 10-year JGBs at yield of 0.110 percent and also increased its buying of five- to ten-year JGBs through an auction to 500 billion yen from 450 billion yen.

Economic Calendar

• 09:30 GMT+1 UK Manufacturing Production m/m
• 13:30 GMT+1 CAD Employment Change
• 13:30 GMT+1 CAD Unemployment Rate
• 13:30 GMT+1 CAD Average Hourly Earnings m/m
• 13:30 GMT+1 US Non-Farm Employment Change
• 13:30 GMT+1 US Unemployment Rate
• 13:30 GMT+1 US Fed Monetary Policy Report