CURRENCY MARKET WRAP
As of Mon Oct 21st, Singapore Time zone UTC+8
U.S. Dollar Index, -0.34%, 97.28
USDJPY, -0.22%, $108.43
EURUSD, +0.42%, $1.1171
GBPUSD, +0.64%, $1.2973
USDCAD, -0.08%, $1.3126
AUDUSD, +0.47%, $0.6856
NZDUSD, +0.61%, $0.6385
Fed Vice Chair Clarida said monetary policy is not on a preset course and decisions will be made “meeting by meeting.” Data from Friday, and last week, likely boosted expectations for a rate cut at the October FOMC meeting. The probability for a 25-basis points cut rose to 89.3% on Friday versus 67.3% one week ago, according to the CME FedWatch Tool.
U.S. Treasuries ended the session on a higher note. The 2-yr yield declined four basis points to 1.57%, and the 10-yr yield declined one basis point to 1.75%. The U.S. Dollar Index declined 0.34% to 97.28. WTI crude declined 0.2%, or $0.13, to $53.76/bbl.
In trade, the United States and China agreed on Friday (Oct 11) to the first phase of a deal to end a trade war, prompting Trump to suspend a threatened tariff hike, but officials said the agreement had to be put on paper and more work was required to get it finalised. The announcement did not include many details, however, and Trump said it could take up to five weeks to get the deal written.
Chinese Vice Premier Liu He said on Saturday (Oct 19) that China will work with the United States to address each other’s core concerns on the basis of equality and mutual respect, and that stopping the trade war would be good for both sides and the world. “Stopping the escalation of the trade war benefits China, the US and the whole world. It’s what producers and consumers alike are hoping for,” Liu said in a rare public speech about the trade war.
In Brexit, British Prime Minister Boris Johnson reluctantly wrote to Brussels asking for a Brexit extension after MPs voted on Saturday (Oct 19) to force him into seeking a delay beyond Oct 31. But Johnson, who has pinned his premiership on getting Britain out of the European Union on time, refused to sign the letter he sent to European Council President Donald Tusk. A third letter written by Britain’s EU ambassador Tim Barrow explained that the Brexit delay letter was only being sent to comply with the law. There is a chance the deal could pass, and Britain could still leave the EU on October 31, but there remains strong opposition to the agreement among MPs.
STOCK MARKET WRAP
S&P500, -0.39%, 2,986.20
Nasdaq, -0.83%, 8,089.54
Nikkei Futures, -0.10%, 22,460.0
The stock market closed lower on options expiration Friday, as investors leaned cautiously following negative corporate headlines and tepid Chinese data. The S&P 500 opened flat, lost as much as 0.7% intraday, and finished lower by 0.39% like the Russell 2000 (-0.4%).
Huge losses in Boeing (BA 344.00, -25.06, -6.8%) and Johnson & Johnson (JNJ 127.70, -8.47, -6.2%) weighed on the Dow Jones Industrial Average (-1.0%), while weakness in technology stocks undercut the Nasdaq Composite (-0.8%).
Boeing was hit by a report from Reuters suggesting that the company may have misled the FAA about the safety of its 737 MAX based on instant messages between two employees in 2016. Johnson & Johnson disappointed investors after trace levels of asbestos found in some samples of baby powder prompted the company to recall 33,000 bottles.
American Express (AXP 116.76, -2.34, -2.0%) lost ground despite beating earnings estimates, but the financials sector (+0.2%) was undeterred. The defensive-oriented real estate (+1.0%), utilities (+0.4%), and consumer staples (+0.2%) sectors also finished higher, with the latter getting a lift from Coca-Cola (KO 54.78, +0.99, +1.8%) following its in-line results.