European Open Market Briefing – 21/09/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index rose on Thursday, boosted by gains on Wall Street and a weaker yen after the Federal Reserve signalled it still expects to raise interest rates one more time this year. The Nikkei was up 0.8 percent at the end of morning trading at 20,479.88 points, its highest since August 2015. The broader Topix and the JPX-Nikkei Index 400 were both up 0.7 percent. MSCI’s broadest dollar-denominated index of Asia-Pacific stocks outside Japan was down 0.4 percent, shrugging off slight gains on Wall Street. South Korea’s Kospi was down 0.2 percent, while Australia shed 0.9 percent. Hong Kong’s Hang Seng posted slim gains.

In Currency Markets the dollar rose to a two-month high against the yen and extended its gains against the euro on Thursday after a hawkish-sounding Federal Reserve heightened expectations for an interest rate hike in December.  The euro shed 0.1 percent to $1.1886 after falling 0.8 percent the previous day, when it reversed a four-session winning run. The dollar was 0.2 percent higher at 112.430 yen after brushing 112.645, its highest since July 18. The New Zealand dollar was down 0.4 percent at $0.7331, its rally the previous day losing steam against a broadly stronger dollar. The Australian dollar fell 0.35 percent to $0.8004. The dollar index was steady at 92.524 and near a two-week high of 92.697 set overnight, when it added 0.8 percent.

In Commodities Markets oil markets fell on Thursday, weighed down by rising crude inventories and production in the United States as well as a stronger dollar, which potentially hampers fuel consumption in countries that use other currencies at home. Brent crude futures were at $56.18 a barrel, down 0.2 percent, from their last close. U.S. West Texas Intermediate crude futures were at $50.67 per barrel, down 2 cents from the last settlement. U.S. commercial crude oil inventories rose for a third straight week, building by 4.6 million barrels in the week ending Sept. 15 to 472.83 million barrels.  U.S. gold futures for December delivery lost 1 percent to $1,302.10 an ounce.

In US Equity Markets  the S&P 500 and the Dow ended slightly higher on Wednesday, adding to their string of closing records, after the Federal Reserve signaled it expects another interest rate hike by year-end and disclosed timing for reducing its balance sheet. The Dow Jones Industrial Average rose 0.19 percent to end at 22,412.59 and the S&P 500 gained 0.06 percent, to 2,508.24. The Nasdaq Composite lost 0.08 percent, to 6,456.04, with Apple Inc as its biggest drag. Shares of Apple fell 1.7 percent after it admitted its latest smartwatch has connectivity problems. The S&P’s financial sector ended 0.6 percent higher as banks benefit from higher rates. The consumer staples sector fell 0.9 percent while the utilities sector ended 0.8 percent lower.

In Bond Markets benchmark U.S. Treasury yields jumped to their highest levels in six weeks on Wednesday after the Federal Reserve’s statement from its policy meeting was interpreted as keeping a December interest rate hike on the table. Benchmark 10-year notes fell 9/32 in price to yield 2.27 percent, after yields got as far as 2.29 percent, the highest since Aug. 8. Portugal’s 10-year bond yield slid as much as 35 basis points to 2.45 percent, its lowest level since January 2016.

Economic Calendar

• 07:30 GMT+1 JPY BOJ Press Conference
• 13:30 GMT+1 US Unemployment Claims
• 14:30 GMT+1 EU ECB President Draghi Speaks