European Opening Session – 12/04/2017 – by Arjun Lakhanpal

In Asian Equity Markets Japanese stocks fell to their lowest in more than four months on Wednesday as rising geopolitical tensions dragged all sectors into negative territory, with exporters hit especially hard as the safe haven yen spiked to a five-month high. The Nikkei 225 index lost 1.3 percent to 18,506.17 in midmorning trade after falling to as low as 18,460.59 earlier, the lowest level since Dec. 7. The broader Topix decreased 1.2 percent to 1,477.79 and the JPX-Nikkei Index 400 shed 1.1 percent to 13,225.17. MSCI’s broadest index of Asia-Pacific stocks outside Japan was near flat. Shanghai eased 0.4 percent as China reported a slight slowdown in producer price inflation.

In Currency Markets the yen hit five-month highs against the dollar, euro and sterling on Wednesday, as simmering geopolitical tensions checked risk appetite and put the safe-haven Japanese currency in favour. The dollar was at 109.465 yen after going as low as 109.350, its weakest since Nov. 17. The common currency was up 0.1 percent at $1.0610, adding to modest overnight gains. The Australian dollar was steady at $0.7493 after falling to a near three-month trough of $0.7475 the previous day. The New Zealand dollar lost 0.3 percent to $0.6940. The dollar index against a basket of major currencies was steady at 100.710, after losing 0.3 percent the previous day.

In Commodities Markets oil prices rose on Wednesday, putting crude futures on track for their longest streak of gains since August 2016, as Saudi Arabia was reported to be lobbying OPEC and other producers to extend a production cut beyond the first half of 2017. Brent crude futures were at $56.36 per barrel, up 0.23 percent, from their last close, and their highest since early March. U.S. West Texas Intermediate crude futures were up 0.19 percent, at $53.49 a barrel, also their highest since early last month.  Spot gold had edged up 0.1 percent to $1,274.91 per ounce and spot silver was firm at $18.30 an ounce. Platinum fell 0.1 percent to $965.70 per ounce, while palladium lost 0.1 percent to $801.25.

In US Equity Markets stocks ended down but well off the day’s lows on Tuesday, with concern over geopolitical risks weighing on sentiment as investors readied for the start of U.S. corporate earnings reports. The Dow Jones Industrial Average ended down 0.03 percent, to 20,651.3, the S&P 500 lost 0.14 percent, to 2,353.78 and the Nasdaq Composite fell 0.24 percent, to 5,866.77. The financial sector, down 0.3 percent, was among the day’s worst performers, while technology was the biggest drag, with the tech index down 0.4 percent.  Shares of United Continental fell 1.1 percent after a worldwide backlash erupted against the airline over a passenger who was dragged off one of its U.S. flights.

In Bond Markets Japanese government bonds firmed on Wednesday, with the benchmark 10-year yield edging down to a four-month low, taking cues from U.S. Treasury yields and reduced purchases by the Bank of Japan in its bond-buying operations. The benchmark 10-year JGB yield fell one basis point to 0.025 percent, its lowest since Dec. 5, while 10-year JGB futures added 0.20 point to 150.88 after earlier touching 150.92, their highest since Nov. 15. In the superlong zone, the 20-year yield fell two basis points to 0.590 percent, its lowest since mid-January, while the 30-year yield lost 3 basis points to 0.805 percent, its lowest since late February.

Economic Calendar

• 09:00 GMT+1 UK BOE Gov Carney Speaks
• 09:30 GMT+1 UK Average Earnings Index 3m/y
• 15:00 GMT+1 CAD BOC Monetary Policy Report
• 15:00 GMT+1 CAD BOC Rate Statement
• 15:00 GMT+1 CAD Overnight Rate
• 15:30 GMT+1 US Crude Oil Inventories
• 16:15 GMT+1 CAD BOC Press Conference
• 21:15 GMT+1 CAD BOC Gov Poloz Speaks