CURRENCY MARKET WRAP
As of Tue Oct 29th, Singapore Time zone UTC+8
U.S. Dollar Index, -0.07%, 97.76
USDJPY, +0.22%, $108.98
EURUSD, +0.14%, $1.1099
GBPUSD, +0.22%, $1.2857
USDCAD, -0.10%, $1.3051
AUDUSD, +0.24%, $0.6839
NZDUSD, -0.08%, $0.6353
Both the U.S. and China continued to work on “Phase One” of a trade agreement over the weekend, which Trump said is “ahead of schedule” for him to sign. China’s state-run media reported that technical consultations on parts of the text were “basically completed.”
U.S. Treasuries finished lower in a curve-steepening trade. The 2-yr yield increased two basis points to 1.65%, and the 10-yr yield increased five basis points to 1.85%. The U.S. Dollar Index declined 0.07% to 97.76. WTI crude lost 0.9%, or $0.49, to $55.95/bbl to end a four-session winning streak.
In Brexit, though the UK Parliament rejected Prime Minister Johnson’s request for an early election, the market was pleased that the EU offered the UK a 3 month extension that included an option to leave earlier. They also ruled out further negotiating over the withdrawal agreement, which are the terms that Johnson was hoping for.
STOCK MARKET WRAP
S&P500, +0.56%, 3,039.42
Nasdaq, +1.01%, 8,325.99
Nikkei Futures, +0.44%, 22,952.5
S&P 500 set new record highs on Monday, increasing 0.56% as trade sentiment remained upbeat and investors reacted positively to corporate news. The Nasdaq Composite (+1.0%) and Russell 2000 (+0.9%) pulled out ahead, while the Dow Jones Industrial Average (+0.5%) trailed its peers.
Technology stocks outperformed, with Microsoft (MSFT 144.19, +3.46, +2.5%) providing influential leadership for the broader market and S&P 500 information technology sector (+1.3%) after it was awarded a $10 billion cloud contract with the Department of Defense.
Contributing to the advance in the communication services sector were solid gains in Alphabet (GOOG 1290.00, +24.87, +2.0%) and AT&T (T 38.49, +1.58, +4.3%). Alphabet set an all-time high amid heavier-than-usual volume in front of its earnings report, while AT&T announced a multi-year plan to increase shareholder value, which was viewed favorably by activist investor Elliott Management.
Monday also saw some notable M&A activity. Alphabet is reportedly in talks to acquire Fitbit (FIT 5.64, +1.33, +30.9%). Tiffany & Co. (TIF 129.72, +31.17, +31.6%) received a $14.5 billion unsolicited offer from LVMH for $120 per share in cash. Liberty Property Trust (LPT 57.50, +6.93, +13.7%) agreed to be acquired by Prologis (PLD 85.89, -4.97, -5.5%) for about $12.6 billion in an all-stock deal.
In earnings news, Spotify (SPOT 140.20, +19.51, +16.2%) reported a surprise profit and reported MAU growth above expectations. Dow component Walgreens Boots Alliance (WBA 55.80, +0.38, +0.7%) didn’t draw much attention following its mostly in-line results.
In after hours trading, Alphabet reported earnings which beat on the top line but missed on EPS, sending the stock lower, erasing almost all of its gains. Net income was $7.068BN, down from $9.192BN a year ago. EPS of $10.12, missing estimates of $12.35 and down sharply from $13.06 a year ago. Commenting on the result, CEO Sundar Pichai said that “I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud. We’re focused on providing the most helpful services to our users and partners, and we see many opportunities ahead.” After tumbling as low as $1,225 after hours, the stocks has stabilized around $1,265, roughly where it started the day.