Daily Note




In European Equity Markets the pan-European Stoxx 600 was up 0.6 percent with all major bourses and most sectors in positive territory. Europe’s autos stocks were among the top performers, rallying almost 1.4 percent on earnings news. German auto supplier Schaeffler reported a rise in first-half net profit and increased its 2018 revenue guidance for its industrial division. Shares of Schaeffler pushed higher during Tuesday’s trade to reach almost 9 percent, topping the Stoxx 600.

In Currency Markets the U.S. dollar weakened against the euro on Tuesday as the Chinese yuan showed more stability, after the currency pair neared but failed to break through technical levels supporting the single currency. The euro gained 0.38 percent against the greenback to $1.1597.The Aussie rallied more than half a percent to a one-week high at $0.7439 against the greenback after the central bank kept policy setting on hold and the Chinese stock market rallied strongly towards the close, boosting risk appetite.

In Commodities Markets oil prices rose about 1 percent on Tuesday after U.S. sanctions on Iranian goods went into effect, intensifying concerns that sanctions on Iranian oil, expected in November, could cause supply shortages. Brent crude oil futures rose 89 cents to $74.64 per barrel and U.S. West Texas Intermediate (WTI) crude futures were up 52 cents at $69.53 a barrel. The first U.S. sanctions against OPEC member Iran officially came into effect today.  These sanctions did not include Iran’s oil exports. The country exported almost 3 million barrels per day (bpd) of crude in July.

In US Equity Markets the benchmark S&P 500 was within striking distance of a record high on Tuesday, powered by gains in technology stocks, and a strong second-quarter earnings season fueled optimism about the strength in the U.S. economy. The index was up 0.37 percent at 2860.91, about half a percent away from the record it hit on Jan. 26. The Nasdaq Composite was up 0.32 percent, at 7,885.16. Broadridge Financial rose 5.7 percent and Mosaic 5.4 percent, and were the biggest gainers on the S&P after reporting quarterly results.

In Bond Markets a recovery in Italy’s bond market gathered pace on Tuesday, with yields edging lower and pulling further away from two-month highs hit at the end of last week as investors fretted about upcoming budget talks in Rome. At one stage two-year Italian yields were down 6 bps at 0.91 percent before settling at 0.94 percent, still about 40 bps below a two-month peak touched on Friday at 1.36 percent. The 10-year Bund yield was last trading at 0.41 percent , up 2 bps on the day.




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