European Open Market Briefing – 27/06/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index edged up to hover near two-year highs on Tuesday morning as a weaker yen helped exporters rise, while financial stocks rebounded from Monday’s declines. The Nikkei gained 0.4 percent to 20,233.23 in midmorning trade after hitting as high as 20,250.10 earlier. The broader Topix rose 0.4 percent to 1,618.93 and the JPX-Nikkei Index 400 advanced 0.5 percent to 14,398.53. MSCI’s broadest index of Asia-Pacific stocks outside Japan stood little changed. Elsewhere, Shanghai’s benchmark index and Australian stocks were both down 0.1 percent.

In Currency Markets the dollar rose on Tuesday to its highest level against the yen in nearly five weeks ahead of comments from Federal Reserve Chair Janet Yellen that are expected to underline her positive view of the U.S. economic outlook. The dollar rose to 112.075 yen earlier on Tuesday, its highest level since May 24. It was last at 111.88 yen, up slightly on the day. The euro rose 0.1 percent to $1.1188, moving up from its overnight low of $1.1172 reached after dovish comments from European Central Bank President Mario Draghi, which contrasted sharply with those of Fed officials. The dollar index, which tracks the greenback against a basket of six major rivals, inched 0.1 percent lower on the day to 97.367.

In Commodities Markets crude oil futures rose for a fourth consecutive session on Tuesday as investors covered short positions, though worries over a festering supply glut kept a lid on prices. U.S. West Texas Intermediate crude futures were up 0.3 percent, at $43.50 per barrel. Brent crude futures gained 0.3 percent, to $45.97 per barrel. Spot gold had risen 0.1 percent to $1,244.96 per ounce. It hit a near six-week low of $1,236.46 in the previous session. U.S. gold futures for August delivery fell 0.1 percent to $1,245.40 per ounce. Among other precious metals, silver rose 0.2 percent to $16.58 per ounce. Palladium climbed 0.1 percent to $866.00 per ounce. Platinum inched up 0.3 percent to $915.10 per ounce.

In US Equity Markets  the S&P 500 and the Dow barely rose on Monday as gains were offset by a fall in technology stocks, which pushed the Nasdaq lower as investors turned to more defensive sectors. The Dow rose 0.07 percent, to 21,409.55, the S&P 500 lost 0.03 percent, to 2,439.07 and the Nasdaq Composite fell 0.29 percent, to 6,247.15. Shares in Hertz Global Holdings closed up 13.5 percent after a report that Apple Inc is leasing a small fleet of cars from the rental company to test self-driving technology. Apple lost 0.3 percent. The S&P financial index rose 0.5 percent after New York Fed President William Dudley and San Francisco Fed President John Williams generally brushed off weak data and stuck by their plans to keep hiking rates.

In Bond Markets Japanese government bonds mostly firmed on Tuesday, bolstered by strong demand at an auction of two-year notes. The 10-year cash JGB yield fell half a basis point to 0.045 percent, while the September 10-year JGB futures contract finished up 0.13 point at its session high of 150.62. The two-year JGB yield shed 1.5 basis points to minus 0.120 percent. But the superlong zone was treading water, with the 20-year JGB yield flat at 0.560 percent, while the 30-year JGB yield was unchanged on the day at 0.805 percent.

Economic Calendar

• 09:00 GMT+1 EU ECB President Draghi Speaks
• 10:30 GMT+1 UK BOE Financial Stability Report
• 11:00 GMT+1 UK BOE Gov Carney Speaks
• 15:00 GMT+1 US CB Consumer Confidence
• 18:00 GMT+1 US Fed Chair Yellen Speaks