European Open Market Briefing – 23/10/2017 – by Arjun Lakhanpal
October 23, 2017In Asian Equity Markets Japan’s Nikkei index made 21-year highs on Monday and was on course to rise for a record fifteenth straight session, lifted by a weaker yen after Japanese Prime Minister Shinzo Abe’s coalition scored a resounding election victory on Sunday. The Nikkei was up 0.9 percent at 21,658.25 at the end of morning trade. The broader Topix was 0.8 percent higher at 1,744.32, while the JPX-Nikkei Index 400 gained 0.8 percent to 15,462.25. MSCI’s broadest index of Asia-Pacific stocks outside Japan held steady, while Singapore’s main index reached its highest in over two years.
In Currency Markets the dollar touched a three-month high against the yen on Monday, with an emphatic election victory for Japan’s ruling party keeping yen-weakening stimulus measures at the heart of government policy. The U.S. currency was up 0.25 percent at 113.79, losing a bit of momentum after earlier touching 114.10, its highest since July 11. The euro was 0.15 percent lower at $1.1769, extending losses from Friday when it lost 0.6 percent. The New Zealand dollar, battered last week by a change in government, fell to a five-month low of $0.6932 against the broadly stronger U.S. currency and last traded at $0.6964. The Australian dollar was little changed at $0.7820.
In Commodities Markets oil prices rose on Monday over supply concerns in the Middle East and as the U.S. market showed further signs of tightening while demand in Asia keeps rising. Brent crude futures were at $57.90, up 0.26 percent, from their last close. U.S. West Texas Intermediate crude futures were at $52.13 per barrel, up 0.56 percent. China’s oil demand remains voracious, hitting a January to September average of 8.5 million barrels per day (bpd). Spot gold was down 0.4 percent at $1,275.70 an ounce, after hitting its lowest since Oct. 6 at $1,273.80 earlier in the session. In other precious metals, silver was down 0.3 percent at $16.95 an ounce. Platinum fell 0.7 percent to $913.90 an ounce and palladium lost 0.6 percent to $969.
In US Equity Markets stocks hit record closing highs on Friday and the S&P 500 posted a sixth week of gains after the U.S. Senate passed a budget resolution, lifting hopes that President Donald Trump’s tax-cut plan may move forward. The Dow Jones Industrial Average rose 0.71 percent, to end at 23,328.63, the S&P 500 gained 0.51 percent, to 2,575.21 and the Nasdaq Composite added 0.36 percent, to 6,629.05. Shares of General Electric reversed an early decline of 6.3 percent to end 1.1 percent higher, and the S&P industrials index also finished up 1.1 percent. The company’s new chief executive vowed to shed more than $20 billion worth of assets after the company’s quarterly results badly missed Wall Street’s expectations.
In Bond Markets Japanese government bond prices erased early losses on Monday after Prime Minister Shinzo Abe’s ruling bloc scored a big election win, ensuring his reflationist economic policies will stay in place. The yield on the 10-year JGBs initially rose to 0.080 percent, matching a 10-week high hit earlier this month, but it fell back to 0.070 percent, flat on the day. The 20-year yield rose 0.5 basis point to 0.605 percent, matching a three-month high hit last week, while the 30-year yield rose 0.5 basis point to 0.890 percent.
