Financial Markets Summary 13 June 2018

European cash equity markets are mixed at the closing bell (FTSE +0.1%, DAC +0.4%,
CAC +0.1%, FTSEMIB +0.5%). US bourses are mostly lower at the close with real estate stocks the worst performers amid the prospect of higher rates (DJIA -0.5%, S&P -0.4%, NASDAQ -0.1%).

European Closing Report

Wall Street also saw a relatively flat open as investors tread water ahead of the FOMC policy decision later today – rates are widely expected to rise by 25 basis points. In the bond markets, US yields are also little changed for the day but we have seen the Dollar begin to drift lower in recent trade – this was despite the stronger-than-expected US PPI data.

Elsewhere in FX, Sterling has clawed back losses seen in response to the soft CPI data released this morning. Staying in the UK, Ireland’s Europe Minister McEntee said Ireland welcomes elements of the UK Brexit plan, adding that they will seek to intensify Brexit talks. He also said they want a Brexit deal by October.

Elsewhere, oil prices have turned higher after the DoE reported a sizeable drawdown in US crude inventories. Earlier on, US President Trump did tweet that ‘oil prices are too high’.


US Closing Report

The Federal Open Market Committee raised the target range for the federal funds rate by twenty five basis points this afternoon, and signalled another two hikes to come this year. They also dropped language from the statement that mentioned gradual increases and rates remaining below longer-run levels. 

In the press conference that followed, Governor Powell confirmed that the Fed would hold a press conference after every meeting from January although stressed this did not signal anything. The initial reaction was a rally in both the US Dollar and government bond yields with the 10-year rising above three percent although this proved short lived while the Dollar Index fell back to where it started. 

Trade war concerns may have played their part in the pullback after a WSJ story suggested the US are preparing to impose tariffs on US goods, possibly as early as Friday. In equity space, US bourses are mostly lower at the close with real estate stocks the worst performers amid the prospect of higher rates (DJIA -0.5%, S&P -0.4%, NASDAQ -0.1%). 

Elsewhere, The UK House of Commons voted to reject the Lords amendment to the Brexit bill that sought to keep the UK in the European Economic Area – this sparked the resignation of 5 Labour frontbenchers and notable rebellions on both sides.

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Financial Markets Summary 14 June 2018

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