Financial Markets Summary 14 June 2018

The European Central Bank caught markets off guard this afternoon as they announced some notable changes to both policy and forward guidance. US cash equity markets are mixed at the closing bell (DJIA -0.1%, S&P +0.2%, NASDAQ +0.8%).

European Closing Report

The monthly pace of asset purchases will now be halved to €15 Bln at the end of September and will halt altogether at the end of December. Policymakers also said that they expect rates to remain at their present levels at least through the next summer. 

In response, both the Euro and Euro Zone government bond yields fell sharply in a move that was only amplified by the dovish tone struck by President Mario Draghi during the press conference. In equity space, European stocks drove higher during the announcements although financials struggled to keep pace amid the decline in yields. 

Turning to Wall Street, US bourses also saw a positive open while the Dollar has driven higher on stronger-than-expected US retail sales. Initial jobless claims and import prices were also stronger than expected. 

Elsewhere, we saw a pullback in oil prices with US crude futures turning negative after Russian Energy Minister Novak said the OPEC+ output adjustment details are to be discussed next week as he called on the group not allow a supply surplus. He also suggested OPEC+ should consider up to a +1.5 Mln BPD output increase.


US Closing Report

Consumer discretionary, real estate and utilities have led gains while financials have played the laggard amid lower yields. US 10-year borrowing costs have shed around three basis points to 2.94% following the dovish ECB policy announcement earlier today. 

The Dollar Index meanwhile has rocketed higher, supported also by stronger-than-expected US retail sales. Sticking woth the US economy, the IMF said they forecast strong US growth and job creation in the near-term while they expect wages and labor costs to grow modestly as slack lessons. The did also warn that US fiscal policy boosts risks to domestic and global economy. 

Meanwhile, the Atlanta Fed nudged their Q2 GDP tracker up to +4.8% from +4.6%. In the UK, rebel Tory MP’s have rejected the amendment put forward by PM May after a last minute wording change, setting up another showdown in the House of Commons next week. Elsewhere, US crude futures settled at $66.89 (+$0.25).

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Financial Markets Summary 13 June 2018
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