European Open Market Briefing – 31/05/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japanese stocks decreased on Wednesday morning after weakness in U.S. shares and a stronger yen hurt sentiment, while sliding oil prices dragged down the mining sector. The Nikkei index fell 0.5 percent to 19,589.25 in midmorning trade. The broader Topix shed 0.2 percent to 1,570.06 and the JPX-Nikkei Index 400 declined 0.2 percent to 13,983.63.  MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 0.2 percent on Wednesday, with Chinese stocks leading the region higher as investors returned from a long holiday break.

In Currency Markets the British pound came under pressure on Wednesday after a new poll found that British Prime Minister Theresa May’s Conservative Party risks falling short of an overall majority in next month’s national election. The pound fell to $1.2791, near a one-month low of $1.2775 touched on Friday. The pound also fell to 0.8738 pound per euro, near Friday’s eight-week low of 0.8750. The dollar fell to near two-week low of 110.665 yen and last traded at 110.85 yen. The euro also recovered from Tuesday’s low of $1.1110 to $1.1176, despite worries about an early election in Italy and a softer-than-expected inflation reading in Germany.

In Commodities Markets oil prices fell on Wednesday, as rising output from Libya added to concerns about increasing U.S. production that is undermining OPEC-led production cuts aimed at tightening the market. Brent crude futures were at $51.66 per barrel, down 0.4 percent, from their last close. U.S. West Texas Intermediate crude futures were at $49.37 per barrel, down 0.6 percent, from their last settlement. Spot gold was down 0.3 percent to $1,259.51 per ounce. In other precious metals, silver fell 0.6 percent to $17.26 an ounce though it is set to rise 0.4 percent for the month. Platinum was up 0.5 pct at $939.45 an ounce and palladium was up 0.1 percent at $805.60 an ounce.

In US Equity Markets  stocks inched lower on Tuesday, with the S&P 500 retreating slightly from a record, as weakness in the energy and financial sectors outweighed gains in technology stocks. The Dow Jones Industrial Average fell 0.24 percent, to 21,029.47, the S&P 500 lost 0.12 percent, to 2,412.91 and the Nasdaq Composite lost  0.11 percent, to 6,203.19. The technology sector rose 0.31 percent, boosted by gains in Apple and Microsoft, both up 0.6 percent. Amazon was up 0.1 percent at $996.70, after briefly crossing the $1,000 mark.  Telecoms rose 1.4 percent after MoffettNathanson upgraded the sector to “neutral” from “underweight,” citing a lack of negative near-term catalysts.

In Bond Markets yields on most U.S. Treasury bonds and notes fell to their lowest levels in more than a week on Tuesday on month-end buying and after U.S. inflation data reinforced doubts that the Federal Reserve would raise interest rates more than one more time in 2017. Benchmark 10-year U.S. Treasury yields touched 2.211 percent and 30-year yields hit 2.881 percent. Three-year yields hit 1.432 percent.