CURRENCY MARKET WRAP

As of Thu 5th Dec, Singapore Time zone UTC+8

U.S. Dollar Index, -0.13%, 97.60
USDJPY, +0.18%, $108.83
EURUSD, +0.01%, $1.1083
GBPUSD, +0.89%, $1.3110
USDCAD, -0.77%, $1.3194
AUDUSD, +0.31%, $0.6849
NZDUSD, +0.41%, $0.6548

U.S. ISM Non-Manufacturing Index decelerated to 53.9% in November (consensus 54.8%) from 54.7% in October. Key takeaway from the report is that it was underpinned by accelerating growth in both the New Orders Index (to 57.1% from 55.6%) and the Employment Index (to 55.5% from 53.7%), which is not what one would expect to see if it was believed the economy was at a recession tipping point.

ADP Employment Report for November showed an estimated 67,000 positions were added to private-sector payrolls. That was much weaker than the consensus estimate of 175,000.

Risk appetite was bolstered on Wednesday, as the market reacted positively to a Bloomberg report that suggested a trade deal with China is close to being reached despite the recent escalation in rhetoric.

Details were scant and the sources were anonymous, but the positive-sounding headline proved enough to catalyze yesterday’s positive bias. Trump even said that talks are moving along nicely, which may have reinforced the good mood and helped the market overlook an ADP Employment Change Report and ISM Non-Manufacturing Index for November that missed expectations.

U.S. Treasuries retreated after a big advance yesterday, driving yields higher in a curve-steepening trade. The 2-yr yield increased four basis points to 1.58%, and the 10-yr yield increased seven basis points to 1.78%. The U.S. Dollar Index declined 0.13% to 97.60.

STOCK MARKET WRAP 

S&P500, +0.63%, 3,112.76
Nasdaq, +0.54%, 8,566.67
Nikkei Futures, +0.27, 23,293

All 11 S&P 500 sectors had traded in the green, led by the energy sector (+1.6%), but a late fade into the close did knock the materials sector (-0.04%) into the red. Energy stocks rose in tandem with oil prices ($58.42, +2.29, +4.1%), which were boosted by news that OPEC+ is considering deeper production cuts.

Notable corporate leadership changes were also viewed favorably by shareholders.

Alphabet’s (GOOG 1320.54, +25.26, +2.0%) CEO Larry Page and President Sergey Brin stepped down from management and ceded CEO duties to Sundar Pichai in addition to his current CEO role at Google. Expedia’s (EXPE 105.56, +6.17, +6.2%) CEO Mark Okerstrom and CFO Alan Pickerill resigned at the board’s request.

On the earnings front, Campbell Soup (CPB 48.47, +0.89, +1.9%) hit a 52-week high after it beat earnings expectations. Salesforce (CRM 156.43, -5.14, -3.2%) and Workday (WDAY 165.39, -8.11, -4.7%) both beat top and bottom-line estimates and provided decent guidance, but shares still finished noticeably lower.

CURRENCY MARKET WRAP

As of Tue 4th Dec, Singapore Time zone UTC+8

U.S. Dollar Index, -0.17%, 97.72
USDJPY, -0.33%, $108.64
EURUSD, +0.02%, $1.1082
GBPUSD, +0.44%, $1.2994
USDCAD, -0.12%, $1.3292
AUDUSD, +0.43%, $0.6848
NZDUSD, +0.22%, $0.6517

Dollar was offered after Trump suggested a trade deal with China might be better if it waited until after the 2020 election. The negative bias formed before the open as Trump spoke to reporters at the NATO summit in London. Trump may or may not have been using a negotiating tactic, but the negative-sounding headline understandably provided an excuse to take some profits off the table given the uncertainty that remains regarding a deal and the Dec. 15 tariffs.

On a separate trade front, the USTR proposed that $2.4 billion of French imports be taxed up to 100% in response to the country passing a digital tax law that allegedly targets U.S. tech companies. The Wall Street Journal reported that this amounts to less than 5% of the goods that were imported from France in 2018.

The 2-yr yield dropped eight basis points to 1.54%, and the 10-yr yield dropped 13 basis points to 1.71%. The U.S. Dollar Index declined 0.1% to 97.74. WTI crude increased 0.3%, or $0.14, to $56.13/bbl.

As expected, the RBA board, at its final meeting for the year, kept rates on hold at the historic low of 0.75 per cent. Rebounding house prices have painted the Reserve Bank into a tight corner, potentially undermining the prospects of further interest rate cuts.

STOCK MARKET WRAP 

S&P500, -0.66%, 3,093.20
Nasdaq, -0.55%, 8,520.64
Nikkei Futures, -1.83%, 23,130.0

Some follow-through selling ensued shortly after the open, but selling pressure was kept in check for the rest of the session. Weakness was found primarily in the cyclical sectors, most notably in the S&P 500 energy (-1.6%) and financials (-1.3%) sectors. The Dow Jones Transportation Average fell 2.2%.

Conversely, the real estate (+0.7%) and utilities (+0.5%) sectors were the lone sectors to finish in positive territory, predominately due to the safety trade in Treasuries that sent yields sharply lower.

Corporate news was relatively light, but a notable story included Cleveland-Cliffs (CLF 7.51, -0.90, -10.7%) agreeing to acquire AK Steel (AKS 3.01, +0.12, +4.2%) for $1.1 billion in an all-stock transaction.

CURRENCY MARKET WRAP

As of Tue 3rd Dec, Singapore Time zone UTC+8

U.S. Dollar Index, -0.42%, 97.89
USDJPY, -0.47%, $109.03
EURUSD, +0.53%, $1.1076
GBPUSD, +0.21%, $1.2940
USDCAD, +0.16%, $1.3306
AUDUSD, +0.78%, $0.6818
NZDUSD, +1.03%, $0.6498

U.S. session began relatively unchanged, but selling quickly ensued and accelerated after the ISM Manufacturing Index for November declined to 48.1% (consensus 49.2%) from 48.3% in October. The deceleration in activity was disappointing but was especially disheartening after manufacturing PMIs from China and Europe showed improvement, as a result, Dollar weakness was broad based.

Dampening risk sentiment was Trump declaring he will restore tariffs on steel and aluminum imports from Argentina and Brazil after the countries devalued their currencies. On a related note, reports continued to present the existing tariffs on Chinese imports and the Hong Kong Human Rights and Democracy Act as roadblocks to a trade deal.

Elsewhere, longer-dated U.S. Treasuries succumbed to increased selling pressure after the Financial Times reported that the Fed is considering a rule to allow inflation to exceed its 2.0% target. The 2-yr yield increased two basis points to 1.84%, and the 10-yr yield increased six basis points to 1.84%. The U.S. Dollar Index declined 0.42% to 97.89.

Christine Lagarde asked EU lawmakers on Monday to give her time to learn the ropes of her new job and to reshape the ECB’s monetary policy in what is likely to be a lengthy policy review. The former International Monetary Fund chief has promised an overarching review of ECB business ranging from how it defines its inflation objective to whether it includes a fight against climate change among its responsibilities.

STOCK MARKET WRAP 

S&P500, -0.86%, 3,113.87
Nasdaq, -1.12%, 8,567.99
Nikkei Futures, -0.71%, 23,213.0

Leading the decline were the S&P 500 real estate (-1.8%), industrials (-1.6%), and information technology (-1.4%) sectors, all of which fell more than 1.0%. The consumer staples (+0.3%) and energy (+0.03%) sectors finished in positive territory, with the latter finding support from higher oil prices ($55.99, +0.82, +1.5%).

Other underperforming stocks included those in the trade-sensitive Philadelphia Semiconductor Index (-1.5%) and many highly-valued growth stocks like Roku (ROKU 136.07, -24.30, -15.2%). The latter was downgraded to Underweight at Morgan Stanley with a $110 price target for valuation reasons.

Consumer spending appeared in good shape on this Cyber Monday. Adobe Analytics estimated online sales would total $9.4 billion by the end of today after Black Friday registered a record $7.4 billion in online sales.

CURRENCY MARKET WRAP 

As of Mon 2nd Dec, Singapore Time zone UTC+8

U.S. Dollar Index, -0.05%, 98.27
USDJPY, -0.01%, $109.51
EURUSD, +0.07%, $1.1017
GBPUSD, +0.11%, $1.2928
USDCAD, -0.04%, $1.3274
AUDUSD, -0.07%, $0.6765
NZDUSD, +0.05%, $0.6422

It was a quiet week on the currency front, with little movement or notable prints. Trump signed the Hong Kong Human Rights and Democracy Act into law on Wednesday evening, prompting some angry rhetoric, but no concrete response, from Chinese officials. The signing of that act contributed to today’s cautious showing, but the overall response was muted, considering the S&P 500 was only pressured to its closing level from Tuesday after setting a fresh record on Wednesday.

STOCK MARKET WRAP 

S&P500, -0.40%, 3,140.98
Nasdaq, -0.40%, 8,670.08
Nikkei Futures, +0.02%, 23,477.5

All eleven sectors ended the day in negative territory. The energy sector (-1.0%) spent the day at the bottom of the leaderboard but was able to climb off its low ahead of the close. The sector lost 1.6% for the week, pressured by significant weakness in the price of crude oil. The energy component fell more than 4.0% to $55.52/bbl, sliding back below its 50-day moving average (55.63). OPEC and OPEC+ producers will meet in Vienna next week, but there are concerns that they will not agree to lower output.

The consumer discretionary (-0.8%) sector was the second weakest performer, as retailers trailed the broader market after showing relative strength earlier this week. The SPDR S&P Retail ETF (XRT 44.68, -0.34, -0.8%) registered its first loss in more than a week after touching a three-week high on Wednesday. Telsey Advisory Group shared its view of early holiday sales, noting that store traffic was likely down a touch when compared to last year. However, the firm believes that the softness was offset by an earlier availability of online sales.

CURRENCY MARKET WRAP

As of Fri 29th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.05%, 98.26
USDJPY, -0.04%, $109.52
EURUSD, +0.11%, $1.1012
GBPUSD, -0.08%, $1.2912
USDCAD, -0.02%, $1.3281
AUDUSD, -0.14%, $0.6768
NZDUSD, -0.02%, $0.6419

U.S. markets were closed for Thanksgiving. There were no notable economic prints.

China vented on Thursday after Trump signed new human rights legislation covering the protest-wracked city of Hong Kong. It denounced the new law as illegal interference in its own affairs. On Thursday, Beijing’s main agency on trade remained quiet on the legislation even as other officials railed against it, suggesting that the government remained open to a trade deal and would let the volatile issue of Hong Kong simmer, at least for now.

The first bill authorizes the American government to impose sanctions on Chinese or Hong Kong officials responsible for human rights abuses there. The second bill bans the sale of American-made tear gas, rubber bullets or other crowd-control equipment to the Hong Kong authorities.

STOCK MARKET WRAP 

S&P500, – Closed –
Nasdaq, – Closed –
Nikkei Futures, +0.02%, 23,477.5

U.S. markets were closed for Thanksgiving.