European Open Market Briefing – 30/06/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index stumbled to two-week lows on Friday morning after investors turned risk-averse as major central banks signalled that the era of cheap money was coming to an end, which hurt both U.S. and European markets overnight. The Nikkei lost 1.2 percent to 19,978.73 in mid-morning trade after falling to as low as 19,946.51, the lowest level since June 16. The MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.7 percent, after hitting a two-year high on Thursday. The CSI 300 index fell 0.3 percent, while the Shanghai Composite lost  0.1 percent. Hong Kong’s Hang Seng slid 0.9 percent.

In Currency Markets the euro traded near a 14-month high on Friday and was on track for its best quarter in nearly 7 years, lifted by growing expectations that the European Central Bank is preparing to scale back its monetary stimulus. The euro last traded at $1.1441, clinging near this week’s high of $1.1445, its strongest level since May 2016, having rallied 2.2 percent so far this week. The Australian dollar edged up 0.2 percent to $0.7699, having risen to as high as $0.7712 at one point, its strongest level since March. The Canadian dollar touched a five-month high of C$1.2970 per U.S. dollar on Friday, and was last up about 0.2 percent on the day at C$1.2983.

In Commodities Markets crude oil futures on Friday were on track for their biggest weekly gain since mid-May, ending five weeks of losses with prices underpinned by a decline in U.S. output. U.S. crude was trading up 0.7 percent at $45.22 a barrel on Friday, with Brent climbing 0.6 percent to $47.70 a barrel. Data indicating a fall in U.S. production bolstered markets this week after crude prices hit a 10-month low last week in the face of a mounting supply glut. U.S. crude output fell 100,000 barrels per day (bpd) to 9.3 million bpd last week, the steepest weekly fall since July 2016. Spot gold was nearly flat at $1,245.08 per ounce.

In US Equity Markets stocks  fell sharply on Thursday, with the S&P 500 and the Dow industrials suffering their worst daily percentage decreases in about six weeks, as a recent decline in technology shares deepened and outweighed strength in bank stocks. The Dow Jones Industrial Average fell 0.78 percent, to 21,287.03, the S&P 500 lost 0.86 percent, to 2,419.7 and the Nasdaq Composite fell 1.44 percent, to 6,144.35. Bank stocks gained after the U.S. Federal Reserve approved the banks’ plans to raise dividend payouts and share buybacks under its annual stress test program. The technology sector lost 1.8 percent and were the worst-performing major group. Nike shares rose after the market closed following the company’s quarterly results.

In Bond Markets benchmark U.S. Treasury yields rose to six-week highs on Thursday on the likelihood that central banks in Europe will become less accommodative, before bonds pared price losses as stocks declined. Benchmark 10-year notes fell 14/32 in price to yield 2.27 percent, after earlier rising to 2.30 percent, the highest since May 17. Data on Thursday showed the U.S. economy slowed less sharply in the first quarter than initially estimated due to unexpectedly higher consumer spending and a bigger jump in exports.

Economic Calendar

• 09:30 GMT+1 UK Current Account
• 13:30 GMT+1 CAD GDP m/m
• 15:30 GMT+1 CAD BOC Business Outlook Survey