European Open Market Briefing – 15/11/2017 – by A Lakhanpal

In Asian Equity Markets Japan’s Nikkei index fell to a two-week low on Wednesday morning, with most sectors in negative territory as investors took profit on a rally that pushed local stocks about 20 percent higher over the past two months. The Nikkei shed 0.8 percent to 22,207.01 in midmorning trade, after hitting as low as 22,150.63, its weakest level since Nov. 1. The broader Topix fell 1.2 percent to 1,757.23, with 32 of its 33 subsectors in negative territory.  MSCI’s broadest index of Asia-Pacific stocks outside Japan was down 0.45 percent. China’s Shanghai index was down 0.7 percent, Australian stocks fell 0.3 percent and South Korea’s KOSPI shed 0.3 percent.

In Currency Markets a reduction in risk appetites lifted the yen on Wednesday and pressured the Australian dollar, as investors awaited U.S. consumer inflation data later in the global session.  The Aussie was the big mover of the Asian session, skidding 0.6 percent against its U.S. counterpart to $0.7587, brushing its lowest levels since July. Against the yen, it fell 0.8 percent to 85.81 yen after falling as far as 85.67, its lowest since mid-August. The euro remained close to 2-1/2 week highs, getting a boost from Tuesday’s upbeat German economic data. The common currency edged down slightly to $1.1797 after jumping more than 1 percent in the previous session. Against the yen, the greenback fell 0.3 percent to 113.15.

In Commodities Markets oil prices fell more than 1 percent on Wednesday, continuing Tuesday’s slide after the International Energy Agency cast doubts over the past few months’ narrative of tightening fuel markets.  Brent crude futures were at $61.33 per barrel, down 1.4 percent from their last close. U.S. West Texas Intermediate crude was at $55 per barrel, down 1.3 percent. The International Energy Agency on Tuesday cut its oil demand growth forecast by 100,000 barrels per day for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018.  Spot gold was up 0.1 percent at $1,281.73 per ounce and silver gained 0.2 percent to $17.045 per ounce.

In US Equity Markets  stock indexes fell on Tuesday as General Electric shares plunged for a second straight day and a decrease in crude oil prices hit energy stocks. The Dow Jones Industrial Average fell 0.13 percent, to end at 23,409.47, the S&P 500 lost 0.23 percent, to 2,578.87 and the Nasdaq Composite fell 0.29 percent, to 6,737.87. GE fell 5.9 percent in the largest daily volume in two years as investors wondered if a massive overhaul of the company by new Chief Executive John Flannery will be enough to revive the industrial conglomerate. Advance Auto Parts rose 16.3 percent after it affirmed its full-year profit forecast and beat quarterly profit estimates.

In Bond Markets U.S. Treasury two-year note yields touched a nine-year high on Tuesday, while those on long-dated debt fell as the yield curve flattened for a second straight day and investors braced for the next tightening by the Federal Reserve in December. In late trading, the 10-year Treasury yield was at 2.378 percent, down from 2.4 percent late on Monday. The U.S. two-year yield hit a nine-year peak just shy of 1.7 percent, up from Monday’s 1.687 percent. U.S. 30-year bond yields, on the other hand, fell to 2.836 percent, from 2.869 percent on Monday.

Economic Calendar

• 10:30 GMT+0 UK Average Earnings Index 3m/y
• 14:30 GMT+0 US CPI m/m
• 14:30 GMT+0 US Core CPI m/m
• 14:30 GMT+0 US Core Retail Sales m/m
• 14:30 GMT+0 US Retail Sales m/m
• 16:30 GMT+0 US Crude Oil Inventories