European Open Market Briefing – 20/09/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index was nearly flat on Wednesday morning after scaling more than two-year highs on the previous day, while investors stayed cautious before the U.S. Federal Reserve’s policy meeting which ends later in the day. The Nikkei was flat at 20,302.96 in midmorning trade, after rising 2.0 percent to hit the highest level since August 2015 on Tuesday supported by a weaker yen and hopes for a snap election. MSCI’s broadest index of Asia-Pacific stocks outside Japan stood little changed. Shanghai lost 0.2 percent while Hong Kong’s Hang Seng added 0.2 percent.

In Currency Markets the dollar edged up against a basket of currencies on Wednesday as investors awaited the outcome of the Federal Reserve’s meeting at which it was expected to announce plans to trim its $4.2 trillion in bond holdings. The U.S. currency was steady on the day against its Japanese counterpart at 111.56 yen, moving back toward an eight-week peak of 111.88 yen scaled overnight. The euro was also steady on the day, at $1.1990. The dollar index, which tracks the greenback against a basket of six major rivals, added 0.1 percent to 91.855, holding well above its more than 2-1/2 year low of 91.011 fell on Sept. 8.

In Commodities Markets oil prices rose on Wednesday after Iraq’s oil minister said OPEC and other crude producers were considering extending or even deepening a supply cut to curb a global glut, while a report showed a smaller-than-expected increase in U.S. inventories. U.S. WTI crude futures were up 0.7 percent, at $49.81 a barrel. Brent crude futures climbed 0.4 percent, to $55.37. Crude inventories rose by 1.4 million barrels in the week to Sept. 15 to 470.3 million, compared with expectations for an increase of 3.5 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 422,000 barrels, API said.  U.S. gold futures for December delivery were up 0.3 percent to $1,314.40 an ounce.

In US Equity Markets  the three major stock indexes edged higher on Tuesday, logging closing records, with financial stocks providing the biggest boost a day ahead of the Fed’s concluding statement from its two-day policy meeting. The Dow rose 0.18 percent, to 22,370.8. The S&P 500 gained 0.11 percent, to 2,506.65 and the Nasdaq Composite added 0.1 percent, to 6,461.32. The biggest U.S. telephone operators, Verizon and AT&T rose more than 2 percent, providing the second- and third-biggest individual stock boosts for the S&P. Shares of smaller wireless carrier T-Mobile rose 5.9 percent and Sprint jumped 6.8 percent, following a report they were in active merger talks.

In Bond Markets U.S. Treasury prices gained slightly on Tuesday but yields held within a tight range as investors waited on the conclusion of the Federal Reserve’s two-day policy meeting for new indications on whether an additional interest rate hike is likely this year. Benchmark 10-year notes were last up 3/32 in price to yield 2.22 percent, from 2.23 percent late on Monday. Treasury yields briefly rose on Tuesday after data showed that U.S. import prices recorded their biggest increase in seven months in August as the cost of petroleum rose and there were also signs of a pickup in underlying imported inflation.

Economic Calendar

• 09:30 GMT+1 UK Retail Sales m/m
• 15:30 GMT+1 US Crude Oil Inventories
• 19:00 GMT+1 US FOMC Economic Projections
• 19:00 GMT+1 US FOMC Statement
• 19:00 GMT+1 US Federal Funds Rate
• 19:30 GMT+1 US FOMC Press Conference
• 21:45 GMT+1 NZD GDP q/q