Financial Markets Summary 01 June 2018

European cash equity markets have held higher this afternoon to close firmly in the green (FTSE +0.2%, DAX +0.8%, CAC +1.2%, FTSE MIB +1.5%, IBEX +1.6%). US cash equity markets are higher at the closing bell, led by the material and technology sectors (DJIA +0.9%, S&P +1.1%, NASDAQ +1.5%).

Spanish and Italian stocks have led gains as investors welcomed reduced political uncertainty and a modest pullback in yields. We did see a small uptick in Italian yields however after reports emerged that 5-Star and League MEP’s had voted for an amendment to the budget resolution that made funds available for countries that wanted to leave the monetary union. 

The Euro also declined in currency space despite the resolution losing by a sizeable majority in a vote that took place in the European Parliament on Wednesday. We saw a positive open on Wall Street meanwhile with gains across nine of the ten sectors besides utilities. US government bond yields and the Dollar have also climbed since the US jobs report was released – non-farm payrolls rose 223K (f/c. +189K) while average hourly earnings also beat at +2.7% YoY (f/c. +2.6%). 

There were also stronger-than-expected readings for ISM manufacturing and construction spending. Elsewhere, EU Trade Minister Malmstrom said the door to negotiations with the US on trade is closed for the moment. Malmstrom also confirmed they had launched a WTO case against China over technology transfer. Still to come today, the US Baker Hughes rig count at 18:00 BST.


US Closing Report

Investors also welcomed positive news on the labour market after the US economy added 223K jobs in May (f/c. +189K) and average hourly earnings beat at +2.7% YoY (f/c. +2.6%). The data has also boosted US government bond yields and the Dollar today and both remain higher at the close. 

Risk was also supported later in the day by confirmation from US President Trump that the North Korea summit will take place on June 12th in Singapore. He added that very positive things are happening on North Korea. 

Elsewhere, US crude futures settled at $65.81 (-$1.23). We also heard from the new Italian Economy Minister Tria who said there is no political force in Italy that wants to leave the Euro.

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