CURRENCY MARKET WRAP
As of Mon Sep 16th, Singapore Time zone UTC+8
U.S. Dollar Index, -0.05%, 98.26
USDJPY, -0.03%, $108.08
EURUSD, +0.11%, $1.1075
GBPUSD, +1.36%, $1.2502
USDCAD, +0.56%, $1.3285
AUDUSD, +0.16%, $0.6878
NZDUSD, -0.44%, $0.6377
U.S. Retail sales for August were up 0.4% m/m in August (consensus +0.2%). The report could further allay financial market concerns of a recession, which have been fuelled by a year-long trade war between the United States and China as well as slowing global growth. The preliminary reading for the University of Michigan’s Index of Consumer Sentiment was 92.0 (consensus 90.2), up from the final reading of 89.8 for August.
In trade, China will exempt some agricultural products from additional tariffs on U.S. goods, including pork and soybeans, China’s official Xinhua News Agency said Friday, in the latest sign of easing Sino-U.S. tensions before a new round of talks aimed at curbing a bruising trade war. The United States and China have both made conciliatory gestures, with China renewing purchases of U.S. farm goods and U.S. President Donald Trump delaying a tariff increase on certain Chinese goods.
The 2-yr yield increased seven basis points to 1.79%, and the 10-yr yield increased 11 basis points to 1.90%. The U.S. Dollar Index declined 0.05% to 98.26. WTI crude lost 0.5%, or $0.25, to $54.88/bbl.
Saudi Arabia grappled with weekend attacks on the heart of its oil production facilities in Abqaiq and Khurais. Abqaiq is the world’s largest oil processing facility and crude oil stabilization plant with a processing capacity of more than 7 million barrels per day. Saturday’s attack is the biggest on Saudi oil infrastructure since Saddam Hussein’s invasion of Kuwait in 1990, when Iraq’s military fired scud missiles into the kingdom. While Yemen’s Houthi rebels, who have been at war with the Saudis since 2015, claimed the attack, numerous officials and analysts point to Tehran. U.S. Secretary of State Mike Pompeo via Twitter blamed Iran for the attack, saying “Iran has now launched an unprecedented attack on the world’s energy supply. There is no evidence the attacks came from Yemen.” Iran responded by calling the allegations “pointless.” Security experts say the attack likely came from an Iranian-backed militant group in Iraq. Baghdad on Sunday afternoon denied its territory was involved in any way.
On Today’s Open, U.S. oil futures advanced about 11% to $60.98 a barrel, maintaining gains from just after trading opened at 6 p.m. ET. Brent crude, the global gauge of oil prices, soared 13% to $68.13 a barrel. If those moves held, they would mark some of the biggest intraday for crude in years and put oil at its highest level in months. Analysts cautioned that prices likely will be volatile as trading volumes increase throughout the session and more details emerge about the disruption in Saudi Arabia, where attacks over the weekend knocked out 5.7 million barrels a day of production, or roughly 5% of the globe’s output.
STOCK MARKET WRAP
S&P500, -0.07%, 3,007.39
Nasdaq, -0.22%, 8,176.71
Nikkei Futures, -0.09%, 21,800.0
The S&P 500 declined 0.07% on Friday, as losses in crowded areas like technology and real estate offset gains in value-oriented spaces like financials and energy. The Nasdaq Composite lost 0.22%. The Dow Jones Industrial Average (+0.1%) rose for the eighth straight day, and the Russell 2000 (+0.2%) finished the week up 4.9%.
Apple’s price target was cut to $165 from $187 at Goldman Sachs on concerns that its streaming service will adversely affect its income statement. Apple responded, saying the introduction of Apple TV+ will not have a material impact on its financial results, which helped temper selling pressure in the afternoon.
Trade-sensitive groups like the S&P 500 materials (+1.1%) and industrials (+0.5%) sectors showed relative strength while the energy (+0.8%) and financials (+0.8%) sectors capped off an impressive week on a high note. Financial stocks benefited from another rise in yields, and curve-steepening, as Treasuries sold off following an uptick in retail sales and a rebound in consumer sentiment.