European Open Market Briefing – 18/05/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japanese stocks fell to 1-1/2-week lows on Thursday morning on worries that allegations against the U.S. President Donald Trump over his interference with a federal investigation would delay his efforts on tax cuts and economic stimulus. The Nikkei index lost 1.8 percent to 19,457.75 after falling to as low as 19,449.73, the lowest since May 2. The broader Topix fell 1.7 percent to 1,549.01 and the JPX-Nikkei Index 400 declined 1.7 percent to 13,822.74.  MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.4 percent. Australian stocks lost 1.2 percent and South Korea’s KOSPI declined 0.5 percent.

In Currency Markets the dollar wallowed near six-month lows against a basket of major currencies on Thursday as the U.S. political crisis appeared to deepen, and likely to delay any efforts by President Donald Trump to carry out his economic stimulus plans. The dollar fell 2.09 percent against the yen on Wednesday, its biggest fall since July 29 last year. It fell to a three-week low of 110.53 yen on Thursday before bouncing back a tad to 111.09 yen, up 0.3 percent from late U.S. levels, on Japanese bargain-hunting. The euro  hit a six-month high of $1.1174 and last stood at $1.1161. The Swiss franc hit a six-month high of 0.9774 to the dollar on Wednesday before easing back to 0.9789.

In Commodities Markets oil prices fell on Thursday, weighed down by plentiful supply despite ongoing efforts led by OPEC to tighten the market by cutting production. Brent crude was down 0.3 percent, from its last close at $52.03 per barrel. U.S. West Texas Intermediate crude was down 0.3 percent, at $48.91. The U.S. Energy Information Administration said on Wednesday that crude inventories fell 1.8 million barrels for the week to May 12, to 520.8 million barrels. Spot gold was flat at $1,260.61 per ounce, after earlier touching its strongest since May 1 at $1,263.02. Among other precious metals, silver inched 0.1 percent higher to $16.87 an ounce. Platinum was down 0.3 percent at $939 an ounce. Palladium was up 0.2 percent to $783.30.

In US Equity Markets the S&P 500 and the Dow notched their biggest one-day fall since Sept. 9 as investor hopes for tax cuts and other pro-business policies faded after reports that U.S. President Donald Trump tried to interfere with a federal investigation set off alarm bells on Wall Street. The Dow Jones Industrial Average fell 1.78 percent, to 20,606.93, the S&P 500 lost 1.82 percent, to 2,357.03 and the Nasdaq Composite fell 2.57 percent, to 6,011.24.  The financial sector closed down 3 percent while the technology sector fell 2.8 percent. The S&P bank sub-sector lost 4 percent, led by a 5.9 percent decline in Bank of America shares and a 3.8 percent loss for JPMorgan

In Bond Markets U.S. Treasury yields were on track on Wednesday for their biggest daily percent decline since July as concerns grew that allegations against U.S. President Donald Trump would delay his efforts to cut taxes and increase infrastructure spending. Benchmark 10-year notes gained a full point in price to yield 2.22 percent, the lowest level since April 21, and down from 2.33 percent late on Tuesday.

Economic Calendar

• 09:30 GMT+1 UK Retail Sales m/m
• 13:30 GMT+1 US Unemployment Claims
• 18:00 GMT+1 EU ECB President Draghi Speaks