EU MARKET WRAP – US equities drag their European counterparts lower, while CAD benefits from better than expected GDP ahead of tomorrow’s BoC rate decision

Today’s European session has seen little newsflow with no tier 1 data from the US and little guidance for European stocks prior to the US crossover, leading indices to drift modestly higher. However, when North American markets opened, US equities retreated from yesterday’s record highs with biotechs dragging the NASDAQ-100 into negative territory after negative earnings from the likes of Mylan and amid weakness seen in auto names following underwhelming sales updates from Ford and GM. Financials underperformed in Europe, weighed upon by this morning’s negative report by Barclays, who increased their FX provision and suggested this could not be the end of increases.

In terms of fixed income markets, Bunds and USTs spent much of the European session lower after Finland opened books on its 2031 offering and the UK saw a disappointing uptake for its latest Gilt auction, while in the US, Actavis launched their 10 part offering at USD 21bln, the second largest offering on record. However, prior to the European close, Bunds and USTs pared their losses, benefiting from the fall in equities.

Elsewhere, FX markets saw AUD hold its overnight gains after RBA unexpectedly held their key rate, while the aforementioned UST paring losses saw outflows away from USD, and thereby strength in JPY. This move continued the earlier move lower in USD/JPY, when overnight Japanese PM Abe’s adviser Honda suggested current levels in the pair are a kind of upper limit in the exchange rate’s comfort zone.

Finally in terms of commodities, the WTI/Brent spread resumed its recent widening trend after some narrowing yesterday. This comes as WTI underperformed its counterpart, weighed on by expectations of another sizeable build at tomorrow’s DoE report, while Brent spent the day in the green after disruptions in Libya.

Looking ahead, tomorrow’s session sees the BoC announce their latest rate decision, a host of services PMI releases from both sides of the Atlantic as well as US ADP Employment change.

EuroStoxx (-1.04%), FTSE 100 (-0.59%), CAC 40 (-0.83%), DAX (-1.01%), IBEX 35 (-1.36%), FTSE MIB (-1.39%), SMI (-1.12%)