CURRENCY MARKET WRAP
As of Wed, Jun 26th, Singapore Time zone UTC+8
Dollar Index +0.20%, 96.18
USDJPY, -0.15%, $107.14
EURUSD, -0.29%, $1.1367
GBPUSD, -0.37%, $1.2690
USDCAD, -0.03%, $1.3179
AUDUSD, -0.10%, $0.6959
NZDUSD, +0.16%, $0.6634
St. Louis Fed President James Bullard (FOMC voter), who was the lone dissenter in this month’s FOMC meeting, said he didn’t think it was necessary to cut the fed funds rate by 50 basis points. Instead, he favored a 25 basis points reduction, viewing it as an “insurance” cut. This stance from one of the Fed’s most vocal doves, in addition to comments from Fed Chair Powell, tempered the market’s hopes for a 50 basis points cut next month. Powell reminded the market that monetary policy should not overreact to any individual data point or short-term swings in sentiment.
In Trade, expectations for the upcoming G-20 summit were also lowered after a White House official told Reuters that the U.S. will not accept any new tariff conditions and that the U.S. is not willing to concede to the Chinese on trade. The goal is to simply reopen talks, which was not the constructive tone the market was anticipating.
U.S. Treasuries finished on a mostly higher note. The 2-yr yield was unchanged at 1.74%, and the 10-yr yield declined three basis points to 1.99%. The U.S. Dollar Index increased 0.2% to 96.18. WTI crude was unchanged at $57.81/bbl.
Nasdaq, -1.70%, 7,591.54
Nikkei Futures, -0.94%, 21,030.0
S&P 500 lost 0.95% on Tuesday, as subdued expectations for next month’s Fed rate decision and the upcoming G-20 summit contributed to a risk-off mood. Shares of technology companies, particularly the mega-cap stocks, underperformed the broader market. Ten of the 11 S&P 500 sectors finished lower, led by the mega-cap stocks within the information technology (-1.8%), communication services (-1.6%), and consumer discretionary (-1.1%) sectors. The materials sector was unchanged.
In M&A news, the health care sector (-0.4%) was home to a mega-merger deal on Tuesday. AbbVie (ABBV 65.70, -12.75, -16.3%) announced it will acquire Allergan (AGN 162.43, +32.86, +25.4%) for about $63 billion, or $188.24 per share, in cash and stock. With shares of AbbVie losing over 16%, the premium was reduced to 37% over AGN’s closing price on Monday.