European Open Market Briefing – 31/08/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japan’s Nikkei index rose to two-week highs on Thursday morning after the dollar rose against the yen helped by bright U.S. economic data, lifting cyclical stocks such as automakers and financial companies. The Nikkei gained 0.7 percent to 19,642.76 by the midday break after reaching as high as 19,661.39, the loftiest level since August 17. The broader Topix gained 0.6 percent to 1,616.78. MSCI’s broadest index of Asia-Pacific stocks outside Japan edged down 0.1 percent, leaving it a modest 0.3 percent firmer for the month so far. The Shanghai Composite fell 0.65 percent, while the Hang Seng Index fell 0.56 percent. Australian stocks gained 0.73 percent.

In Currency Markets the dollar hit a two-week high versus the yen on Thursday, extending its gains after strong U.S. economic data bolstered expectations for a solid U.S. jobs report later this week. The dollar rose to 110.615 yen at one point, its strongest level since Aug. 16. It last changed hands at 110.52 yen, up 0.3 percent from late U.S. trade on Wednesday. The euro fell 0.1 percent to $1.1878, having retreated from a 2-1/2-year high of $1.2070 set on Tuesday. The Aussie fell 0.15 percent to $0.7891, the lowest since August 25. The kiwi lost 0.76 percent to trade at a nearly three-month trough of $0.7147. The dollar index was up 0.19 percent at 93.01.

In Commodities Markets  gasoline prices hit $2 a gallon for the first time since 2015 on Thursday as flooding from storm Harvey knocked out almost a quarter of U.S. refineries, while crude prices stabilized following a decline the previous day. U.S. West Texas Intermediate crude futures were trading at $45.96 per barrel, flat from the last day’s settlement, when prices fell by 0.8 percent intraday. Brent crude was at $50.88 a barrel, also virtually flat from its last close, though the contract fell by over 2 percent during the previous session. U.S. commercial crude oil stocks fell by 5.39 million barrels last week, to 457.77 million barrels, according to data released Wednesday by the U.S. EIA.  Spot gold was down 0.1 percent to $1,307.20 per ounce.

In US Equity Markets  stocks rose on Wednesday after stronger-than-expected U.S. economic growth outweighed concerns about escalating tensions between the United States and North Korea and uncertainty in the aftermath of Hurricane Harvey. The Dow rose 0.12 percent, to end at 21,892.43, the S&P 500 gained 0.46 percent, to 2,457.59 and the Nasdaq Composite added 1.05 percent, to 6,368.31. H&R Block  fell 8.3 percent after the tax preparation service provider reported a bigger-than-expected loss. Aerovironment rose 18.2 percent after the drone maker reported a smaller-than-expected loss and revenue that beat estimates. Analog Devices closed up 5.2 percent after the chipmaker’s quarterly earnings and forecast exceeded expectations.

In Bond Markets Japanese government bond prices edged lower on Thursday as a rise in domestic equities dented the appeal of debt, although the short-end held firm after a two-year auction managed to attract ample demand. The five-year yield rose half a basis point to minus 0.135 percent. The 10-year yield was up 1 basis point at 0.010 percent. The two-year yield fell half a basis point to minus 0.160 percent.  U.S. Treasury yields held near nine-month lows as concerns about rising tensions with North Korea offset the robust data. The 10-year notes were last down 3/32 in price to yield 2.145 percent, up from 2.136 percent on Tuesday.

Economic Calendar

• 13:30 GMT+1 CAD GDP m/m
• 13:30 GMT+1 US Unemployment Claims