CURRENCY MARKET WRAP
As of Thu Sep 5th, Singapore Time zone UTC+8
U.S. Dollar Index, -0.61%, 98.40
USDJPY, +0.38%, $106.34
EURUSD, +0.55%, $1.1034
GBPUSD, +1.32%, $1.2246
USDCAD, -0.81%, $1.3226
AUDUSD, +0.57%, $0.6797
NZDUSD, +0.32%, $0.6356
In Hong Kong, Carrie Lam announces formal withdrawal of the extradition bill and she will also set up an investigative platform to look into the fundamental causes of the social unrest and suggest solutions for the way forward — though stopping short of turning it into a full-fledged commission of inquiry, as demanded by protesters. Apart from the formal withdrawal of the legislation, the protesters have asked for the government to set up a commission of inquiry to investigate police conduct in tackling the protests; grant amnesty to those who have been arrested; stop characterising the protests as riots; and restart the city’s stalled political reform process.
The reaction to the Hong Kong news was made most pronounced in the region’s Hang Seng Index (+3.9%), but the positive sentiment did carry over into global markets as well. In terms of its implications for U.S. companies, some viewed the reprieve as one less obstacle in U.S.-China trade talks.
U.S. Treasuries continued to see increased demand despite the rally in equities, putting some pressure on yields. The 2-yr yield declined three basis points to 1.44%, and the 10-yr yield declined one basis point to 1.46%.
In Brexit, Tory rebels and opposition MPs have defeated the government in the first stage of their attempt to pass a law designed to prevent a no-deal Brexit. The Commons voted 328 to 301 to take control of the agenda, meaning they can bring forward a bill seeking to delay the UK’s exit date. Boris Johnson has lost three key parliamentary votes in less than 24 hours. 1) He was first defeated on Wednesday when the opposition, joined by a group of 21 Conservative rebels, seized control of parliamentary business. 2) He then failed to stop a bill blocking no-deal Brexit from going through. 3) And finally, he lost a vote on whether to hold an early election.
In Canada, the BoC has decided to keep its benchmark rate at 1.75 per cent (expected), despite “escalating trade conflicts” that are starting to take a toll on the country’s economy. The central bank said on Wednesday it has elected to neither raise nor lower its benchmark rate, judging the economy to be growing at a healthy clip despite uncertainty over international trade. The bank noted that exports are growing, the housing market is showing signs of a rebound, and wages are picking up. The Loonie strengthened on the back of a more hawkish than expected statement.
STOCK MARKET WRAP
S&P500, +1.08%, 2,937.78
Nasdaq, +1.30%, 7,976.88
Nikkei Futures, +0.62%, 20,788.0
The stock market snapped back on Wednesday, catalyzed by news that Hong Kong agreed to withdraw its extradition bill while a weaker dollar supported the positive bias in the wake of the latest Brexit news. The S&P 500 (+1.08%) and Nasdaq Composite (+1.3%) increased over 1.0%, while the Dow Jones Industrial Average (+0.9%) and Russell 2000 (+0.9%) advanced 0.9%.
The market was also undeterred by downside guidance from Starbucks (SBUX 96.11, -0.66, -0.7%), Tyson Foods (TSN 86.06, -7.23, -7.8%), JetBlue (JBLU 16.39, -0.78, -4.5%), and American Eagle Outfitters (AEO 14.38, -1.89, -11.6%).