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Financial Markets Summary 26 June 2018

According to the draft summit conclusions, EU leaders are to ask the UK for realistic and workable proposal for their relationship post-Brexit.

Closing Report

European cash equity markets are mostly higher at the closing bell although have eased back from their best levels in recent trade (FTSE +0.4%, DAX -0.2%, CAC +0.3%). 

Wall Street saw a more mixed open meanwhile but bourses have stabilised in positive territory for the time being with technology stocks leading gains; US bank stocks have shown notable underperformance. In the bond markets, moves have been relatively muted with the US 10-year unchanged at 2.88% with this afternoon’s macro data likely limiting any upside. 

US consumer confidence dropped to 126.4 (f/c. 127.6) from 128.8 while S&P/CaseShiller house prices also fell short of expectations. Turning to currencies, the Dollar remains on the front foot with the Dollar Index just above 94.5 while the New Zealand Dollar is the worst G10 performer ahead of Wednesday’s RBNZ meeting. 

Oil prices have spiked higher in recent trade after the US State Department said they are pushing allies to cut oil imports from Iran to zero. Elsewhere, we heard from ECB’s Lane who said inflation is recovering but is still far below target. 

De Guindos added that that he is confident the sustained convergence of inflation to target will continue. Still to come today, a $34.0 Bln 2-year note auction from the US Treaury and possible comments from regional Fed President’s Bostic and Kaplan.

Key Headlines/Data:

* GE Will Spin Off Health-Care Business in Latest Revamp (WSJ):
– General Electric Co. will spin off its health-care business and shed its ownership in oil-services company Baker Hughes, betting that the once-sprawling conglomerate can reverse a painful slump by further shrinking.

* According to the draft summit conclusions, EU leaders are to ask the UK for realistic and workable proposal for their relationship post-Brexit. They also said they would leave the door open for the UK to change its red lines in negotiations.

* UK PM May said Brexit negotiations are making good progress.

* @realDonaldTrump – We are finishing our study of Tariffs on cars from the E.U. in that they have long taken advantage of the U.S. in the form of Trade Barriers and Tariffs. In the end it will all even out – and it won’t take very long!

* Philadelphia Fed Non-Manufacturing PMI (Jun) 39.1, previous 45.3

* US S&P Case Shiller House Price Data (Apr):
– House Price Index M/M +0.2% versus +0.4% expected, previous +0.5% revised to +0.4%
– House Price Index Y/Y +6.6% versus +6.9% expected, previous +6.8% revised to +6.7%

* ECB’s De Guindos said the fundamentals remain in place for continued solid and broad based economic growth. He added that he is confidence the sustained convergence of inflation to target will continue.

* ECB’s Lane said inflation is recovering but is still far below target.

* US Consumer Confidence (Jun) 126.4 versus 127.6 expected, previous 128.0 revised to 128.8

* Richmond Fed Manufacturing (Jun) 20 versus 15 expected, previous 16

* Saudi Arabia Plans Record Crude Oil Production in July (Bloomberg):
– Saudi Arabia is planning to pump a record amount of crude in July, embarking on one of its biggest-ever export surges to cool down oil prices, according to people briefed on the country’s output policy, Bloomberg News reports.

* US State Department said they are pushing allies to cut oil imports from Iran to zero.







































































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