CURRENCY MARKET WRAP 

As of Mon Jul 8th, Singapore Time zone UTC+8

Dollar Index +0.54%, 97.29
USDJPY, +0.61%, $108.47
EURUSD, -0.52%, $1.1226
GBPUSD, -0.43%, $1.2525
USDCAD, +0.19%, $1.3077
AUDUSD, -0.61%, $0.6979
NZDUSD, -0.88%, $0.6629

U.S. job growth rebounded strongly in June, with government payrolls surging, but persistent moderate wage gains and mounting evidence the economy was losing momentum could still encourage the Fed to cut interest rates this month.Nonfarm payrolls increased by 224,000 jobs last month as government employment rose by the most in 10 months, and construction and manufacturing hiring regained speed. The economy created only 72,000 jobs in May. Economists polled by Reuters had forecast payrolls rising 160,000 in June. Average hourly earnings rose 0.2% in June after gaining 0.3% in May. That kept the annual increase in wages at 3.1% in June for a second straight month.

The solid report served as another reminder that the U.S. economy continues holding up well against a backdrop of slowing activity elsewhere. Friday’s news weighed on Treasuries, sending the 10-yr yield higher by ten basis points to 2.05%, while the implied likelihood of a 50-basis point rate cut fell to just 4.9% from 29.2% on Wednesday. The fed funds futures market remains certain that a 25-basis point cut will take place on July 31.

In corporate news, Deutsche Bank will cut approximately 18,000 jobs over the course of the next three years as part of a major reorganization, BBC reported Sunday. Deutsche Bank will exit its Equities Sales & Trading business, while retaining a focused equity capital markets operation. In addition, the bank plans to resize its Fixed Income operations in particular its Rates business and will accelerate the wind-down of its existing non-strategic portfolio. In aggregate, Deutsche Bank will reduce risk-weighted assets currently allocated to these businesses by approximately 40%.

In Geopolitical news, Iran said on Sunday it will shortly boost its uranium enrichment above a cap set by a landmark 2015 nuclear deal, prompting a warning ‘to be careful’ from Trump, who has pressured Tehran to renegotiate the pact. In a sign of heightening tensions, France, Germany and Britain – all parties to the deal – expressed concerns over the step taken by Tehran, its latest effort to force the West to lift sanctions ravaging its limping economy. In a live news conference, senior Iranian officials threatened further violations, saying Tehran would keep reducing its commitments every 60 days unless European parties to the agreement protected it from sanctions imposed by Trump.

STOCK MARKET WRAP 

S&P500, -0.18%, 2,990.41
Nasdaq, -0.21%, 7,841.30
Nikkei Futures, +0.14%, 21,700.0

Equities stumbled out of the gate after a much stronger than expected headline reading of the June Employment Situation report dampened hopes for aggressive action from the FOMC.

Seven out of eleven sectors ended the day in negative territory. Countercyclical real estate (-0.6%) and health care (-0.7%) settled at the bottom of the leaderboard with health care pressured by biotech names after President Trump said that his administration is preparing a “favored-nations clause” that would reduce prices that Medicare pays for drugs. The iShares Nasdaq Biotechnology ETF (IBB 109.22, -1.71, -1.5%) narrowed this week’s gain to just 0.2%.

The top-weighted technology sector (-0.2%) settled in line with the broader market as relative strength in largest sector components outweighed continued weakness among chipmakers. The PHLX Semiconductor Index lost 0.6% with 24 of its 30 components ending in the red. AMD (AMD 31.50, +0.31, +1.0%)was among the outperformers amid speculation that the company’s newest video cards that will become available on Sunday will challenge corresponding offerings from NVIDIA (NVDA 160.23, -2.52, -1.6%)when it comes to price and performance.

CURRENCY MARKET WRAP 

As of Fri Jul 5th, Singapore Time zone UTC+8

Dollar Index -0.05%, 96.72
USDJPY, +0.01%, $107.82
EURUSD, -0.01%, $1.1286
GBPUSD, +0.00%, $1.2582
USDCAD, -0.06%, $1.3047
AUDUSD, -0.06%, $0.7024
NZDUSD, -0.25%, $0.6691

U.S. markets were closed for Independence Day.

Australian retail sales disappointed yet again in May (0.1% Actual vs 0.2% Consensus) and job vacancies fell from record highs, adding to signs of an underpowered economy and bolstering views the country’s central bank may have to cut rates for a third time this year. Financial markets are pricing in a near 90% chance of a third cut to 0.75 per cent before the end of the year.

In trade news, British Royal Marines seized a giant Iranian oil tanker in Gibraltar on Thursday for trying to take oil to Syria in violation of EU sanctions, a dramatic step that drew Tehran’s fury and could escalate its confrontation with the West. The 300,000-tonne tanker is registered as being managed by Singapore-based IShips Management Pte Ltd. Iran has said it wants to keep the nuclear deal alive but must receive promised economic benefits. This week it announced it had accumulated more low-enriched uranium than the deal allows and from July 7 will refine uranium to a greater purity than permitted.

STOCK MARKET WRAP 

S&P500, +0.00%, -Closed-
Nasdaq, +0.00%, -Closed-
Nikkei Futures, +0.34%, 21,663.0

U.S. markets were closed for Independence Day.

CURRENCY MARKET WRAP 

As of Thu Jul 4th, Singapore Time zone UTC+8

Dollar Index +0.04%, 96.77
USDJPY, -0.05%, $107.78
EURUSD, -0.03%, $1.1287
GBPUSD, -0.11%, $1.2582
USDCAD, -0.29%, $1.3058
AUDUSD, +0.51%, $0.7031
NZDUSD, +0.44%, $0.6708

U.S. ISM Non-Manufacturing Index dropped to 55.1% in June (consensus 56.1%) from 56.9% in May. The dividing line between expansion and contraction is 50.0%. Factory orders declined 0.7% in May (consensus -0.4%) after declining a downwardly revised 1.2% (from -0.8%) in April. This is the third decline in factory orders over the past four months. Initial claims for the week ending June 29 decreased by 8,000 to 221,000 (consensus 220,000). Continuing claims for the week ending June 22 also decreased by 8,000 to 1.686 million. Initial claims continue to run at relatively low levels, which suggests employers remain reluctant to reduce the size of their workforce. U.S. ADP Employment for June came in at 102K (consensus 140K), rebounding from previous 41K. The ADP figures comes out ahead of the U.S. Labor Department’s more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.

The 2-yr yield increased by 0.1 basis points and the 10-yr yield declined 2.3 basis points to 1.764% and 1.953%, respectively. The U.S. Dollar Index was unchanged at 96.19.

STOCK MARKET WRAP 

S&P500, +0.77%, 2,995.82
Nasdaq, +0.74%, 7,857.69
Nikkei Futures, -0.10%, 21,698.0

All eleven sectors ended Wednesday in the green, but like yesterday, the advance was paced by countercyclical groups. Real estate (+1.5%), consumer staples (+1.4%), and utilities (+0.8%) jumped out to an early lead, maintaining their position until the close.

Chipmakers underperformed once again. The PHLX Semiconductor Index lost 0.4%, trimming this week’s gain to 0.8%. Broadcom (AVGO 284.89, -10.44, -3.5%) was the weakest performer, falling 3.5% after Bloomberg reported that the company is in advanced talks to acquire Symantec (SYMC 25.10, +3.00, +13.6%). The broader technology sector (+0.7%) settled just behind the broader market.

In other M&A news, Sprint (S 6.98, +0.10, +1.5%) rallied amid reports that the company’s merger with T-Mobile (TMUS 75.82, +0.34, +0.5%) is likely to be approved by the Department of Justice. Shares of Tesla (TSLA 234.90, +10.35, +4.6%) settled higher after the company reported a larger than expected number of total deliveries in Q2.

CURRENCY MARKET WRAP 

As of Wed Jul 3rd, Singapore Time zone UTC+8

Dollar Index -0.09%, 96.72
USDJPY, -0.50%, $107.83
EURUSD, +0.04%, $1.1291
GBPUSD, -0.37%, $1.2597
USDCAD, -0.29%, $1.3097
AUDUSD, +0.40%, $0.6994
NZDUSD, +0.09%, $0.6678

Longer-dated Treasuries settled near their session highs while the 3-month bill underperformed with no apparent catalyst. The 10-yr yield fell six basis points to 1.98% while the 3-month yield rose three basis points to 2.19%. The U.S. Dollar Index fell -0.12%, 96.72.

Gold rallied to recover its previous losses, settling higher by 3.30% at $1,434.30. The rally in gold accelerated after Russian President Putin unexpectedly pulled out of a scheduled event to meet with his defense minister minutes after U.S. Vice President Pence abruptly returned to D.C. Nothing has been revealed but there are reports that this could be related to a nuclear sub accident. The Vice President Pence’s spokeswoman later said that there is no cause for alarm while an unnamed White House official told Bloomberg that the reason for the return will be revealed “weeks from now.”

On the international front, EU officials have agreed on nominees to top EU jobs. All nominations were in-line with the morning’s report from Die Welt. Germany’s Defense Minister Ursula von der Leyen was nominated to replace EU Commission President Jean-Claude Juncker while IMF Managing Director Christine Lagarde was nominated to take over for Mario Draghi at the ECB. Belgian Prime Minister Charles Michel was proposed as the replacement for EU Council President Tusk while Josep Borrell Fontelles was nominated to replace Federica Mogherini as the High Representative for Foreign Affairs and Security Policy. The nominees still need to be approved by the EU Parliament.

As expected, RBA lowered interest rates for the second time this year by 25bp to a new record low of 1%. They left the door open to additional easing, which should have been negative for the currency but after falling initially, Aussie recovered within minutes because the central bank mentioned a few improvements in house prices, infrastructure spending and resources investment. In addition, the July cut was already 90% priced in, hence there was little surprise.

STOCK MARKET WRAP 

S&P500, +0.29%, 2,973.01
Nasdaq, +0.41%, 7,799.82
Nikkei Futures, -0.49%, 21,662.5

S&P 500 (+0.29%) ended Tuesday on a modestly higher note thanks to a late push that lifted the indices out of the red. Relative weakness among small cap names sent the Russell 2000 lower by 0.6%. Countercyclical sectors recorded gains across the board, which helped the S&P 500 stage its late rally. Rate-sensitive real estate (+1.8%) and utilities (+1.2%) finished in the lead. Elsewhere, relative weakness in the Dow Jones Transportation Average (-0.8%) kept the industrials sector (-0.1%) in negative territory. Delta Airlines (DAL 58.54, +0.75, +1.3%) bucked the trend among DJTA members, after boosting its Q2 guidance.

CURRENCY MARKET WRAP 

As of Tue Jul 2nd, Singapore Time zone UTC+8

Dollar Index +0.70%, 96.81
USDJPY, +0.45%, $108.38
EURUSD, -0.73%, $1.1287
GBPUSD, -0.40%, $1.2644
USDCAD, +0.32%, $1.3135
AUDUSD, -0.76%, $0.6966
NZDUSD, -0.70%, $0.6672

Markets started positively on Monday after Saturday’s meeting between Trump and President Xi. While the meeting did not yield concrete steps toward reaching a trade deal, it also did not lead to an escalation of the dispute. Instead, Trump agreed to relax restrictions on sales of components to Huawei and agreed to not impose additional tariffs on imports from China at this time.

The economic situation in major export centers remains weak. To that point, China’s Manufacturing PMI (actual 49.4 from 50.2) remained in contractionary territory in the final June reading, Japan’s Manufacturing PMI decreased to 49.3 from 49.5, and the Manufacturing PMI for the eurozone slipped to 47.6 from 47.8. Adding additional weight to the gloomy sentiment on exports, South Korea reported that its exports decreased 13.5% yr/yr in June. To be fair, the U.S. ISM Manufacturing Index also decreased in June (to 51.7 from 52.1), but it remained in expansionary territory, serving as a reminder that the U.S. economy is still a pocket of relative strength.

Relative strength in U.S. data gave a boost to the U.S. Dollar Index, which climbed 0.51% to 96.81, reclaiming its 200-day moving average in the process. Treasuries ended in the red with shorter tenors leading the retreat. The 10-yr yield rose three basis points to 2.03% while the 2-yr yield rose five basis points to 1.79%.

STOCK MARKET WRAP 

S&P500, +0.77%, 2,964.33
Nasdaq, +1.27%, 7,768.14
Nikkei Futures, +0.11%, 21,667.5

Stock market began the week on a higher note, but the major averages were only able to keep a portion of their gains through the close. The S&P 500 gained 0.77% after being up 1.0% at the start while the tech-heavy Nasdaq rose 1.1% after starting the session with a 1.7% gain.

Stocks surged out of the gate with chipmakers leading the opening rally, which was not a surprise given the group’s sensitivity to trade-related matters. The PHLX Semiconductor Index was up nearly 5.0% at the start of the session but trimmed its gain to 2.7% by the close. Huawei supplier Inphi (IPHI 53.67, +3.57, +7.1%) was the top performer within the group, rallying 7.1%. Semiconductor giant, Intel (INTC 48.05, +0.18, +0.4%), jumped above its 200-day moving average (48.85) at the start, but narrowed its gain to just 0.4% as the session wore on.

CURRENCY MARKET WRAP 

As of Mon Jul 1st, Singapore Time zone UTC+8

Dollar Index -0.06%, 96.13
USDJPY, +0.14%, $107.89
EURUSD, -0.01%, $1.1370
GBPUSD, +0.17%, $1.2695
USDCAD, -0.02%, $1.3092
AUDUSD, +0.21%, $0.7020
NZDUSD, +0.25%, $0.6719

U.S. Treasuries finished little changed on Friday. The 2-yr yield remained at 1.74%, and the 10-yr yield declined one basis point to 2.00%. The U.S. Dollar Index finished relatively unchanged at 96.13. WTI crude fell 1.7% to $58.38/bbl after news that several EU nations set up a trade channel with Iran to avoid U.S. sanctions.

The United States and China agreed on Saturday to restart trade talks after Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei in order to reduce tensions with Beijing. “We’re right back on track,” Trump told reporters after an 80-minute meeting with President Xi at a summit of leaders of the Group of 20 (G20) major economies in Osaka, Japan. “We’re holding back on tariffs and they’re going to buy farm products,” Trump said, without giving details about the purchases. Trump tweeted hours later that the meeting with Xi went “far better than expected.” Trump said the U.S. Commerce Department would study in the next few days whether to take Huawei off the list of firms banned from buying components and technology from U.S. companies without government approval. China welcomed the step.

STOCK MARKET WRAP 

S&P500, +0.58%, 2,941.76
Nasdaq, +0.18%, 7,671.07
Nikkei Futures, +0.01%, 21,260.0

S&P 500 gained 0.58% on Friday, wrapping up its best June since 1955 and closing out the quarter on a high note, as the market positioned itself for the G-20 meeting between Trump and President Xi.

The S&P 500 financials sector (+1.4%) had its own catalyst, rising on the back of bank stocks after the Fed did not object to the capital plans of 18 of the largest banking institutions. As a result, most of these firms will increase their quarterly dividends and buy back more of their outstanding shares. The rest of the S&P 500 sectors also finished higher, buoyed by a last-minute pop into the close. The energy (+1.2%), industrials (+1.0%), and materials (+0.9%) sectors outperformed the broader market.

Shares of Apple (AAPL 197.92, -1.82, -0.9%) were under pressure after the company announced the departure of its long-time chief design officer, Jony Ives. Separately, The Wall Street Journal reported that Apple will move production of its new Mac Pro to China from the U.S.

In earnings news, Nike (NKE 83.95, +0.29, +0.4%) missed profit estimates for the first time in seven years, but it did calm some nerves after it maintained its full-year guidance. Constellation Brands (STZ 196.94, +8.73, +4.6%) pleased investors with its solid results and upbeat guidance.