NOTABLE MOVES
As of Wed, Mar 6, Singapore Time zone UTC+8
USDJPY, +0.10%, $111.86
EURUSD, -0.30%, $1.1307
GBPUSD, -0.25%, $1.3156
USDCAD, +0.39%, $1.3356
AUDUSD, -0.08%, $0.7088
NZDUSD, -0.29%, $0.6801
S&P500, -0.11%, 2,789.65
Nasdaq, +0.08%, 7,156.79
Nikkei Futures, -0.32%, 21,750.0
CURRENCY MARKET WRAP
- For December, the trade deficit widened to $59.8 billion (consensus -$57.8 billion). The December deficit is the widest since October 2008 when the world was in financial crisis.The key takeaway from the report is that it will fuel the Trump Administration’s fire to correct the trade imbalance with assertive policy actions.
- The ADP National Employment Report showed an increase of 183,000 in February (consensus 190,000).
- U.S. Treasuries saw increased buying interest, sending yields lower across the curve. The 2-yr yield declined four basis points to 2.51%, and the 10-yr yield declined three basis points to 2.69%. The U.S. Dollar Index finished flat at 96.86. WTI crude lost 0.5% to $56.25/bbl.
- The Loonie dropped to its weakest level in 2 months after the Bank of Canada said there is increased uncertainty on the timing of future rate hikes. With inflation expected to remain below 2% throughout 2019, the BOC is signalling that no rate hikes are on the horizon. BOC left rates unchanged at 1.75% (consensus 1.75%).
- Aussie and Kiwi fell sharply on the back of weaker than expected Australian Q4 GDP numbers. The economy expanded by only 0.2% (consensus 0.5%) in the last 3 months of the year and this slowdown pushed the annualized pace of growth down to 2.3% from 2.7%.
STOCK MARKET WRAP
- The S&P 500 lost 0.65% on Wednesday, pulling back for the third straight session after a strong start to the year. With few catalysts to justify further gains, stocks succumbed to some profit taking with shares of energy, health care, and semiconductor companies leading the retreat.
- The S&P 500 health care (-1.5%) and energy (-1.3%) sectors were Wednesday’s laggards, weighed down by some industry-specific overhangs. Conversely, the materials (+0.2%), utilities (unch), and communication services (unch) sectors outperformed.
- Congressional wrangling to rein in drug prices, and health care costs in general, continued to dampen buying interest in health care stocks. Separately, a drop in oil prices following some bearish inventory data released on Wednesday, coupled with the cautious commentary on oil prices from Goldman Sachs on Tuesday, and general growth concerns, continued to foster a risk-off sentiment in energy stocks.
- On a related note, the OECD cutting its global GDP growth forecast for 2019 to 3.3% from 3.5%, New York Fed President Jon Williams (FOMC voter) suggesting a “new normal” of slow growth on the order of 2% will keep the Fed patient, and the Fed’s Beige Book, which reported slight-to-moderate growth for 10 of the 12 Fed districts, contributed to the slowdown narrative that drove some profit taking.
- Semiconductor stocks underperformed in today’s trade, dragging on the heavily-weighted S&P 500 information technology sector (-0.6%). Micron (MU 37.93, -2.06, -5.2%) was a notable laggard after Cleveland Research lowered its revenue estimates citing increased pricing headwinds, inventory risk and soft demand.The Philadelphia Semiconductor Index lost 1.7%, although the group was already up 17.5% this year heading into the session. General Electric (GE 9.11, -0.78) dropped 7.9%, extending losses from Tuesday that resulted from the company’s negative outlook for industrial free cash flow in 2019.