European Open Market Briefing – 30/08/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index rebounded on Wednesday morning, recovering from a near four-month low as Wall Street rose and the yen weakened on receding concerns over North Korea’s firing of a missile over Japan. The Nikkei rose 0.6 percent to 19,481.44 in mid-morning trade. The broader Topix gained 0.4 percent to 1,604.32.  MSCI’s broadest index of Asia-Pacific stocks outside Japan advanced 0.6 percent. South Korea’s KOSPI share index rose 0.1 percent, while Australian stocks were little changed. Chinese blue chips rose slightly, and Hong Kong’s Hang Seng climbed 0.9 percent.

In Currency Markets the dollar pulled away from the previous session’s 4-1/2 month lows against the yen on Wednesday as investors’ concerns over North Korea’s latest missile test eased for now, while the Australian dollar rose on upbeat construction data. The dollar last traded at 109.77 yen, up from Tuesday’s low of 108.265 yen, its lowest level since mid-April. The euro edged up 0.1 percent to $1.1981,  having retreated from Tuesday’s high of $1.2070, its strongest level since January 2015. The Australian dollar was the standout mover of the Asian session, jumping 0.5 percent to a four-week high of $0.7995. The dollar index, which tracks the greenback’s value against a basket of six major currencies, added 0.1 percent to 92.292.

In Commodities Markets  oil prices slid on Wednesday but gasoline spiked to its highest since mid-2015 as flooding and storm damage in the wake of Hurricane Harvey knocked out almost a quarter of U.S. refineries, crimping demand for crude but raising fears of fuel shortages. U.S. West Texas Intermediate crude futures were at $46.31 per barrel, down 13 cents from their last close. Brent crude futures were down 21 cents, at $51.79 a barrel.  Spot gold rose 0.3 percent to $1,313.10 per ounce, but was off a more than nine-month peak hit on Tuesday at $1325.94. Silver rose 0.6 percent to $17.45 per ounce and platinum climbed 0.2 percent to $994.30 per ounce. Palladium was mostly unchanged at $942.99 per ounce.

In US Equity Markets  major stock indexes ended higher on Tuesday after recovering from steep early losses triggered by fears that hostilities in the Korean Peninsula could escalate. The Dow rose 0.26 percent, to 21,865.37, the S&P 500 gained 0.08 percent, to 2,446.3 and the Nasdaq Composite added 0.3 percent, to 6,301.89. Gains in the Nasdaq were led by the largest names, with Apple, Alphabet, Microsoft, Facebook and Amazon, the biggest U.S. companies by market value, all higher. Nike fell 1.9 percent after Morgan Stanley cut its price target by $4, to $64. Best Buy Co Inc lost 11.9 percent after the No.1 U.S. consumer electronics retailer warned its strong quarterly sales performance should not be seen as a new normal.

In Bond Markets Japanese government bond yields pulled back from four-month lows on Wednesday as risk aversion that stemmed from the latest bout of tensions over the Korean Peninsula has eased for a while. The benchmark 10-year JGB yield was 0.5 basis point higher at 0.005 percent after touching zero percent on Tuesday, its lowest since April. The five-year yield was 1 basis point higher at minus 0.135 percent following a descent to a 3-1/2-month trough of minus 0.145 percent on Tuesday. U.S. 10-year Treasury yields were at 2.1466 percent on Wednesday, after touching a 9-1/2-month low of 2.086 percent on Tuesday.

Economic Calendar

• 13:15 GMT+1 US ADP Non-Farm Employment Change
• 13:30 GMT+1 US Prelim GDP q/q
• 15:30 GMT+1 US Crude Oil Inventories