European Morning Briefing 16.05

European Morning Briefing 16.05

• Asian equities failed to benefit from the energy-inspired gains seen on Wall Street with the Nikkei 225 stopping just shy of 20,000

• USD/JPY and JPY-crosses traded choppy with the early upside reversed, as sentiment soured and spurred flows into safe-haven JPY

• Looking ahead, highlights include UK inflation, German ZEW, US Building Permits, Housing Starts, ECB’s Nowotny and Coeure

ASIA

Asian equity markets traded mixed after the region failed to sustain the impetus from the positive US lead, where broad-based sentiment was underpinned by a 2% jump in oil prices after Russia and Saudi Arabia agreed to extend output cuts. ASX 200 (+0.2%) and Nikkei 225 (+0.1%) were buoyed at the open following the Wall St gains in which the S&P 500 and Nasdaq posted fresh record highs. However, Nikkei 225 then stalled just shy of 20,000 as China markets entered the fray and dampened risk tone in the region, with Shanghai Comp. (-0.3%) and Hang Seng (-0.3%) reeling on continued regulatory concerns.

China insurance regulator CIRC will conduct inspections to rectify market irregularities and protect consumer interests. (CEN)

PBOC injected CNY 150bln via 7-day reverse repos and CNY 40bln via 14-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.8790 (Prev. 6.8852)

EUROPE/UK

German Chancellor Merkel stated should not always rule out treaty change. (Newswires)

FX

USD/JPY and JPY-crosses traded choppy with the early upside reversed, as sentiment soured and spurred flows into safe-haven JPY. Elsewhere, USD languished and remained below the 99.00 level, while AUD was muted following the RBA minutes release which failed to provide any surprises as the central bank reiterated that it judged rates as consistent with reaching sustainable growth and inflation targets.

RBA minutes from May 2nd meeting state central bank judged rates are consistent with reaching sustainable growth and inflation target. The minutes stated that development in labour and housing markets warrant careful monitoring and that GDP is still expected to pick up to be slightly above 3% by H1 2018 as drag from mining investment dissipates and resource exports recover. (Newswires)

COMMODITIES

Oil prices saw mild gains with WTI crude futures retesting the USD 49/bbl level to the upside during Asia trade, although upside was minimal as momentum from Saudi-Russia extension agreement waned. Gold (+0.4%) rose overnight as sentiment soured, which also saw copper pull back from yesterday’s advances.

US Total shale regions oil production for June is seen up 122,000 BPD at 5.401mln BPD vs. Prev. 109,000 BPD rise in May, according to the EIA. (Newswires)

US

US President Trump is said to have revealed highly classified intelligence to Russian Foreign Minister Lavrov last week which intelligence agency partners had not given authorization to share, according to reports in Washington Post. However, US Secretary of State Tillerson said Trump did not discuss sources, methods or military operations in meeting with Russia's Lavrov, while US National Security Adviser McMaster and Deputy National Security Adviser Powell also dismissed the story as false. (Newswires)


(tfx)

About Author

Our research team will provide all technical and fundamental news as well as all inside information coming from London's City desks to help investors trade fx and stock markets. Be sure that you already follow our twitter account @XMarketsuk in order to be up to date with all latest analysis, news and inside information.

Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. X Markets and XSpot. do not take into account your personal investment objectives or financial situation. X Markets and XSpot. make no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any member of X Markets Websites’ team, a third party or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of X Markets and XSpot. This communication must not be reproduced or further distributed without prior permission.

Risk Warning: Forex (FX) and Contracts for Difference (’CFDs’) are complex financial products that are traded on margin. Trading FX and CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, FX and CFDs may not be suitable for all investors because you may lose all your invested capital. You should not risk more than you are prepared to lose. Before deciding to trade, you need to ensure that you understand the risks involved taking into account your investment objectives and level of experience. Past performance of FX and CFDs is not a reliable indicator of future results. Most FX and CFDs have no set maturity date. Hence, a CFD position matures on the date you choose to close an existing open position. Seek independent advice.