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.

 

 

CURRENCY MARKET WRAP 

As of Thu 28th, Singapore Time zone UTC+8

U.S. Dollar Index, +0.12%, 98.37
USDJPY, +0.30%, $109.38
EURUSD, -0.14%, $1.1005
GBPUSD, +0.49%, $1.2930
USDCAD, +0.11%, $1.3286
AUDUSD, -0.29%, $0.6769
NZDUSD, -0.22%, $0.6413

U.S. key data points included durable goods orders unexpectedly rising 0.6% in October (consensus -0.7%), weekly jobless claims reversing two straight weekly increases, and Q2 GDP being revised up to 2.1% (consensus 1.9%) from 1.9% in the advance estimate. As for trade, Trump said the U.S. and China are in the “final throes of a very important deal.”

U.S. Treasuries ended the session on a lower note, sending yields higher across the curve. The 2-yr yield and the 10-yr yield both increased three basis points each to 1.62% and 1.77%, respectively. The U.S. Dollar Index increased 0.12% to 98.37. WTI crude declined 0.5%, or $0.30, to $58.11/bbl.

STOCK MARKET WRAP 

S&P500, +0.42%, 3,153.63
Nasdaq, +0.66%, 8,705.17
Nikkei Futures, +0.36%, 23,463.0

It was a steady, broad-based advance that was reflected across gains in ten of the 11 S&P 500 sectors, most notably in the consumer discretionary sector (+0.8%). Sentiment on trade and the economy remained upbeat following mostly positive economic reports and some trade comments from Trump.

Trading volume was understandably lighter than usual before the holiday, but that shouldn’t take away from the bullish narrative propelling stocks higher. Some of the market’s most familiar, and widely-owned, stocks in Apple (AAPL 267.84, +3.55, +1.3%), Amazon (AMZN 1818.51, +21.57, +1.2%), and Facebook (FB 202.00, +3.03, +1.5%) saw increased buying interest.

The S&P 500 industrials sector (-0.2%) was the lone holdout today amid losses in Boeing (BA 368.00, -5.51, -1.5%) and Deere (DE 169.06, -7.59, -4.3%). Boeing was pressured by news that the FAA will take control in re-certifying the airworthiness of each 737 MAX plane. In Deere’s case, its cautious FY20 guidance outweighed its revenue beat.

CURRENCY MARKET WRAP 

As of Wed Nov 27th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.07%, 98.25
USDJPY, +0.17%, $109.11
EURUSD, +0.08%, $1.1022
GBPUSD, -0.30%, $1.2860
USDCAD, -0.21%, $1.3271
AUDUSD, +0.10%, $0.6787
NZDUSD, +0.13%, $0.6427

U.S. New home sales in October decreased 0.7% m/m to a seasonally adjusted annual rate of 733,000 units (consensus 710,000) from an upwardly revised 738,000 (from 701,000) in September. On a yr/yr basis, new home sales were up 31.6%. The S&P Case-Shiller Housing Price Index for September increased 2.1% (consensus 2.6%) following an unrevised 2.0% increase in August. The Conference Board’s Consumer Confidence Index for November eased to 125.5 (consensus 126.9) from 125.9 in October, marking the fourth straight monthly retreat.

The Advance International Trade in Goods report for October showed a narrowing in the deficit to $66.5 billion from $70.5 billion in September. Advance Retail Inventories were up 0.3% on top of a 0.2% increase in September and Advance Wholesale Inventories increased 0.2% after declining 0.7% in September.

Risk-appetite was less pronounced than yesterday, but the same factors that have contributed to the market’s record run – trade progress, low rates, low volatility, and supportive monetary policy expectations -remained intact. As for trade, China’s Commerce Ministry said top negotiators held a phone call in which both sides agreed on how to properly resolve outstanding issues for a Phase One deal.

U.S. Treasuries continued to increase, which sent yields slightly lower across the curve. The 2-yr yield declined three basis point to 1.58%, and the 10-yr yield declined two basis points to 1.74%. The U.S. Dollar Index declined 0.07% to 98.25. WTI crude increased 0.6%, or $0.32, to $58.30/bbl.

STOCK MARKET WRAP 

S&P500, +0.22%, 3,140.52
Nasdaq, +0.18%, 8,647.93
Nikkei Futures, +0.51%, 23,450.0

Leading the advance were the S&P 500 real estate (+1.4%), consumer staples (+0.8%), consumer discretionary (+0.8%), and materials (+0.5%) sectors. The energy (-1.0%), financials (-0.1%), and health care (-0.1%) sectors were the lone holdouts.

Other outperformers in the stock market included the SPDR S&P Retail ETF (XRT 44.84, +0.27, +0.6%), which benefited from upbeat earnings forecasts, and the iShares U.S. Home Construction ETF (ITB 45.89, +0.61, +1.4%), which benefited from new home sales in October coming in better than expected at 733,000 units (consensus 710,000).

Best Buy (BBY 81.57, +7.32, +9.9%), Burlington Stores (BURL 225.97, +17.71, +8.5%), and Dick’s Sporting Goods (DKS 46.77, +7.34, +18.6%) impressed investors with their results and guidance, the latter of which is especially important for the retailers with the holiday-shopping season nearly in full swing. Dollar Tree (DLTR 95.26, -17.13, -15.2%) failed to meet expectations.

Separately, several Dow components set new all-time highs today. Walt Disney (DIS 151.64, +1.95, +1.3%) was one of them after the stock was initiated with an Outperform rating at Consumer Edge Research with a price target of $175.

 

CURRENCY MARKET WRAP 

As of Tue Nov 26th, Singapore Time zone UTC+8

U.S. Dollar Index, +0.03%, 98.29
USDJPY, +0.25%, $109.00
EURUSD, -0.11%, $1.1011
GBPUSD, +0.35%, $1.2896
USDCAD, +0.05%, $1.3304
AUDUSD, -0.22%, $0.6776
NZDUSD, +0.10%, $0.6415

Press reports indicated that Chinese government officials called to increase penalties on IP theft, which was interpreted as a move that could help strike a Phase One deal. It should be noted that a separate report from Reuters that suggested a Phase Two deal before the 2020 election is unlikely to be reached did not have a noticeable effect on the market.

U.S. Treasuries finished the session on a higher note despite the risk sentiment displayed in the stock market. The 2-yr yield declined two basis points to 1.61%, and the 10-yr yield declined one basis point to 1.76%. The U.S. Dollar Index increased 0.03% to 98.29. WTI crude increased 0.2%, or $0.10, to $57.98/bbl.

STOCK MARKET WRAP 

S&P500, +0.75%, 3,133.64
Nasdaq, +1.32%, 8,519.88
Nikkei Futures, +0.69%, 23,458.0

U.S. stocks rallied on Monday to lift the S&P 500 (+0.75%), Nasdaq Composite (+1.32%), and Dow Jones Industrial Average (+0.7%) to new closing records, as investors reacted positively to Chinese efforts to better protect intellectual property rights. Sizable M&A activity across several sectors also supported risk sentiment.

The S&P 500 information technology sector (+1.4%), which typically outperforms when the prevailing view on trade is positive, led all sectors in gains amid strength in the semiconductor stocks. NVIDIA (NVDA 221.21, +10.32, +4.9%) was a notable gainer after the stock was upgraded to Overweight from Equal Weight at Morgan Stanley. The Philadelphia Semiconductor Index rose 2.4%.

Two of yesterday’s M&A deals were ones that were already on the market’s radar: Charles Schwab (SCHW 49.31, +1.11, +2.3%) agreed to acquire TD Ameritrade (AMTD 51.78, +3.65, +7.6%) for $26 billion in an all-stock transaction, and LVMH (LVMUY 89.37, +1.98, +2.3%) agreed to acquire Tiffany & Co. (TIF 133.25, +7.74, +6.2%) for $16.2 billion in cash.

New deals included Novartis (NVS 91.30, +0.82, +0.9%) agreeing to acquire The Medicines Co. (MDCO 83.80, +15.25, +22.3%) for $9.7 billion in cash and eBay (EBAY 35.85, +0.73, +2.1%) agreeing to sell StubHub to Viagogo for $4.05 billion in cash.

CURRENCY MARKET WRAP 

As of Mon Nov 25th, Singapore Time zone UTC+8

U.S. Dollar Index, +0.31%, 98.27
USDJPY, +0.02%, $108.66
EURUSD, -0.32%, $1.1024
GBPUSD, -0.63%, $1.2832
USDCAD, -0.17%, $1.3281
AUDUSD, -0.01%, $0.6786
NZDUSD, +0.11%, $0.6410

The final November reading for the University of Michigan Consumer Sentiment Index checked in at 96.8 (consensus 94.9), which exceeded the preliminary estimate of 95.7 and the final October reading of 95.5. The November reading is in close proximity to the average level (97.0) since the start of 2017. The key takeaway from the report is the acknowledgment that consumers aren’t anticipating sizable increases in inflation, unemployment, and interest rates, which suggests consumer spending activity should remain supportive for the U.S. economy.

The market heard from both Trump and his Chinese counterpart, President Xi, on Friday. Xi called for mutual respect and equality in talks, but reiterated Beijing is willing to fight back if necessary. Trump said talks are moving along nicely and closing in on a deal, but the president suggested a deal should not be equal and should favour the U.S. instead. The takeaway was that the market still doesn’t know for certain if a Phase One trade agreement will be signed this year, but talks are ongoing and appear to not be escalating.

U.S. Treasuries ended the week on a flat note. The 2-yr yield increased two basis points to 1.63%, and the 10-yr yield was unchanged at 1.77%. The U.S. Dollar Index increased 0.31% to 98.27. WTI crude declined 1.2%, or $0.70, to $57.88/bbl.

STOCK MARKET WRAP 

S&P500, +0.22%, 3,110.29
Nasdaq, +0.16%, 8,519.88
Nikkei Futures, +0.35%, 23,130.0

Leading the market in gains were the S&P 500 financials (+0.8%), consumer discretionary (+0.7%), and industrials (+0.5%) sectors. The real estate (-0.5%) and energy (-0.4%) sectors were today’s laggards.

Nordstrom (JWN 37.95, +3.63, +10.6%) and Gap (GPS 16.94, +0.72, +4.4%) were among the biggest earnings-driven gainers in the consumer discretionary space, while an earnings-driven decline in Intuit (INTU 259.81, -11.34, -4.2%) put some pressure on the information technology sector (-0.1%).

Elsewhere, the futuristic design of Tesla’s (TSLA 333.04, -21.79, -6.1%) Cybertruck pickup was met with some confusion and mixed reviews. Ultimately, it appeared to be a sell-the-news case after the stock climbed about 40% in the past month.

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CURRENCY MARKET WRAP 

As of Fri Nov 22nd, Singapore Time zone UTC+8

U.S. Dollar Index, +0.09%, 97.96
USDJPY, +0.03%, $108.58
EURUSD, -0.07%, $1.1065
GBPUSD, -0.03%, $1.2919
USDCAD, -0.17%, $1.3281
AUDUSD, -0.21%, $0.6788
NZDUSD, -0.22%, $0.6405

U.S. Initial claims for the week ending November 16 came in at 227,000 (consensus 216,000). Continuing claims for the week ending November 9 were up 3,000 to 1.695 million.

Yesterday’s trade news had little to do with actual progress and didn’t help clarify any uncertainty. Chinese Vice Premier Liu He reportedly extended an invitation to host another round of talks in Beijing and is “cautiously optimistic” about a deal. It was also speculated that the Dec. 15 tariffs could be delayed, even if a deal gets pushed back to next year.

The recent advance in the Treasury market was halted, sending yields higher across the curve. The 2-yr yield increased four basis points to 1.61%, and the 10-yr yield increased three basis points to 1.77%. The U.S. Dollar Index was little changed at 97.96.

STOCK MARKET WRAP 

S&P500, -0.16%, 3,103.54
Nasdaq, -0.24%, 8,506.21
Nikkei Futures, -0.44%, 23,038.0

Perhaps the biggest story of the day, though, was Charles Schwab (SCHW 48.03, +3.28, +7.3%) holding talks to acquire TD Ameritrade (AMTD 48.38, +7.00, +16.9%). CNBC and FOX Business both broke the news, with the latter placing a $26 billion price tag on the potential deal. Both stocks rose considerably, while shares of E*Trade (ETFC 41.58, -4.28, -9.3%) fell 9%.

On the earnings front, the retail space remained in focus. L Brands (LB 17.17, +1.58, +10.1%) was in demand after the company guided Q4 EPS above consensus, while Macy’s (M 14.67, -0.35, -2.3%) and BJ’s Wholesale (BJ 23.84, -2.09, -8.1%) went on sale following their discouraging results and guidance.

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CURRENCY MARKET WRAP 

As of Thu Nov 21st, Singapore Time zone UTC+8

U.S. Dollar Index, +0.01%, 97.87
USDJPY, -0.02%, $108.53
EURUSD, -0.01%, $1.1078
GBPUSD, -0.02%, $1.2926
USDCAD, +0.27%, $1.3304
AUDUSD, -0.39%, $0.6801
NZDUSD, -0.31%, $0.6412

FOMC Minutes from the October meeting didn’t draw much attention, as it was consistent with the prevailing view about monetary policy since that meeting. U.S. Economic data was limited to the weekly MBA Mortgage Applications Index, which declined 2.2% following a 9.6% increase in the prior week.

In trade, completion of a “phase one” U.S.-China trade deal could slide into next year, trade experts and people close to the White House said, as Beijing presses for more extensive tariff rollbacks, and the Trump administration counters with heightened demands of its own. In addition, the crackdown on Hong Kong protesters may also complicate the deal’s completion. The U.S. Senate passed a bill condemning the crackdown and pledging support for Hong Kong, which was immediately criticized by Beijing.

U.S. Treasuries continued to benefit from a defensive mindset, which sent yields lower in a curve-flattening trade. The 2-yr yield declined two basis points to 1.57%, and the 10-yr yield declined five basis points to 1.74%. The U.S. Dollar Index increased 0.01% to 97.87.

STOCK MARKET WRAP 

S&P500, -0.38%, 3,108.46
Nasdaq, -0.51%, 8,526.73
Nikkei Futures, -0.91%, 23,078.0

S&P 500 declined as much as 0.9% on Wednesday after Reuters reported that a Phase One trade deal may not get completed this year. The negative-sounding headline conflicted with the optimistic tone struck by top White House officials, including Commerce Secretary Ross just yesterday. Also transpiring yesterday was the U.S. Senate passing the Hong Kong Human Rights and Democracy Act, much to the contempt of China.

The trade-sensitive areas of the market like the S&P 500 materials (-1.2%), industrials (-0.8%), and information technology (-0.7%) sectors led the decline. The communication services sector (-0.8%), which contains many growth-oriented stocks underperformed.

Unsurprisingly, though, selling pressure quickly abated as investors eagerly bought the dip. In addition, the details of the report were not as foreboding as the headline, and knee-jerk selling, suggested. Tucked in the report was a line indicating that some “China and trade experts” were still optimistic about a deal in the coming weeks.

Leading the afternoon comeback was the energy sector (+1.0%), which found reprieve amid a 3% rebound in oil prices ($56.91, +1.70, +3.1%). The defensive-oriented utilities (+0.6%), consumer staples (+0.2%), and real estate (+0.03%) sectors also finished in positive territory.

Shares of Target (TGT 126.43, +15.58, +14.1%) climbed 14% after the company impressed investors with its stellar results and upbeat guidance. Lowe’s (LOW 117.83, +4.43, +3.9%) also beat earnings estimates and raised its FY20 EPS guidance.