As of Thu, May 2, Singapore Time zone UTC+8
Dollar Index, +0.15%, $97.63
USDJPY, +0.03%, $111.45
EURUSD, -0.13%, $1.1202
GBPUSD, +0.15%, $1.3054
USDCAD, +0.37%, $1.3438
AUDUSD, -0.50%, $0.7013
NZDUSD, -0.73%, $0.6626
In FOMC, the fed funds rate was left unchanged at 2.25-2.50%, as expected. The committee also acknowledged that overall inflation and core inflation have declined and remained below its 2 percent target. Some market participants believed the Fed was setting the precedent for a rate cut should inflation continue to remain persistently below the Fed’s target. Powell, however, downplayed the need to address the muted inflation pressure with a change in policy, including a rate cut, he thinks the recent deceleration in inflation is being caused by transitory factors.
He also said consumer spending and business investment will most likely pick up and noted that some of the risks that they were worried about in March (such as Brexit, Europe and China) have “moderated.” These upbeat comments kicked off a Dollar rally, driving Euro below 1.12 (from 1.1265) and Aussie (from 0.7062) within a few pips of 70 cents. USD/JPY, which had fallen to a low of 111.05 after the subdued FOMC statement, hit a high of 111.60 during Powell’s press conference.
The Treasury market reacted visibly to Powell’s message that a rate cut should not be expected. The 2-yr yield, which fell to 2.22% before the conference, finished higher by three basis points to 2.30%. The 10-yr yield, which fell to 2.46% before the conference, returned to its unchanged mark at 2.51%.
S&P500, -0.75%, 2,923.73
Nasdaq, -0.38%, 7,751.85
Nikkei Futures, -0.97%, 22,190.0
S&P 500 lost 0.75% on Wednesday, pulling back from all-time highs, after Powell dismissed the idea of a rate-cut to address low inflation. Ten of the 11 S&P 500 sectors finished lower, led by energy (-2.2%), materials (-1.8%), and consumer staples (-1.2%). The weakness in the energy space was also driven by lower oil prices ($63.59/bbl, -$0.21, -0.3%) following bearish inventory data out of the Energy Information Administration.
Apple (AAPL 210.52, +9.85, +4.9%) provided some support on Wed after it beat top and bottom-line estimates and issued upbeat guidance for its fiscal third quarter. EPS: $2.46 vs. $2.36 forecast. Revenue: $58.02 billion vs. $57.37 billion forecast. Q2 iPhone revenue: $31.05 billion vs. $31.10 billion expected. Q2 services revenue: $11.45 billion vs. $11.37 billion forecast. Apple also said that it would spend $75 billion on share repurchases and it also approved a 77 cent dividend per share, a 5% increase. Apple has been signaling to investors that iPhone sales aren’t the critical number to watch. Apple instead is highlighting its services revenue, which includes products like iCloud, Apple Music, AppleCare warranties and others. Apple reported $11.45 billion in services revenue, which is up 16% from the same time last year.