European cash equity markets are broadly lower ahead of the midway stage with the Euro Stoxx 600 on course to snap a five-day winning streak (FTSE -0.2%, DAX -1.3%, CAC -0.2%, FTSE MIB -0.1%). Basic resources are among the worst performers following reports yesterday that China are pushing back against US demands in trade negotiations. From a regional perspective, the German DAX has underperformed by some distance as index heavyweights Bayer and BMW fell sharply. We have seen some divergence in the bond markets meanwhile with German 10-year Bunds slightly lower and Gilts in the green with the latter benefiting from mixed consumer price data. Headline UK CPI rose +1.9% YoY (f/c. +1.8%) while the core rate was a touch softer at +1.8% YoY (f/c. +1.9%). Turning to currency space, the aforementioned data did not have much impact on the pound although Gbp/Usd had already been pulled lower by Brexit related uncertainty. UK opposition lawmakers are seeking an emergency debate in parliament to challenge PM May’s pursuit of a short-term delay to Brexit. May is expected to make her request to the EU later today. Elsewhere in FX, moves have been relatively muted with the Dollar Index +0.1% to 96.5 while safe haven demand for the Japanese Yen was limited by dovish remarks from Bank of Japan Governor Kuroda. Oil prices are lower with US crude futures down -1.0% while spot gold has lost -0.2%. Looking ahead, futures are pointing to a relatively flat open on Wall Street as investors look ahead to the FOMC policy decision later today.
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