2 min Market Summary: 4 Dec 2018

NOTABLE MOVES 

USDJPY, -0.04%, 113.44
EURUSD, -0.04%, 1.1366
GBPUSD, +0.13%, 1.2781
USDCAD, -1.01%, 1.318
NZDUSD, +0.86%, 0.6922

S&P500, +1.10%, 2790.37
Nasdaq, +1.52%, 7440.92
Nikkei, +1.00%, 22574.76

CURRENCY MARKET WRAP 

• USD ISM Manufacturing PMI at 59.3 vs expected 57.5. A section of the U.S. Treasuries yield curve just inverted for the first time in more than a decade. The spread between 3- and 5-year yields fell to negative 0.6 basis points Monday, dropping below zero for the first time since 2007. The move is seen to be the first signal that the market is putting the Federal Reserve on notice that the end of its tightening cycle is approaching.
• Markets in Asia were buoyed by the trade agreement between the US and China at last weekend’s G20 meeting. Currencies and equities gapped higher as investors who feared the worst found the outcome satisfactory. However, aside from the initial move at the open, there was no continuation or additional gains during the North American session for stocks, the U.S. dollar or high beta currencies, as investors were not impressed by the “deal.” CNY Caixin Manufacturing PMI at 50.2 vs expected 50.1.
• The U.S. national day of mourning for President George H.W. Bush on Wednesday will delay the release of several economic data. ADP said it will delay by one day its snapshot on how many new jobs were created in November. The Institute for Supply Management and IHS Markit will do the same for their surveys of U.S. service-oriented companies. The federal government, for its part, will also push back its latest update on third-quarter productivity. Fed Chair Powell’s congressional testimony to Congress will be rescheduled. This was a highly anticipated meeting because investors are eager to see if Powell clarifies his comments about interest rates last week.
• Euro ended the day higher versus the US dollar after some headlines suggested that Italy could scale back their deficit plans.
• On Brexit, early buying dissipated in cable with the pair dropping towards 1.2750 after trading as high as 1.2825. UK PMI Manufacturing reported stronger than expected data at 53.1 vs expected 51.6 but traders ignored the news as Brexit woes continued to dog the pair on reports that as many as one-third of PM May’s party may vote against her deal on December 11.
• The G20 meeting also provided relief for the oil price, as Russia and Saudi Arabia agreed to extend into 2019 their deal to manage the oil market, known as OPEC+, although Moscow and Riyadh have yet to confirm any fresh output cuts. The announcement opens the door for a deal at the OPEC meeting on Thursday, 6 December. The Kiwi and CAD also traded higher with the loonie rising on the back of the 4.4% recovery in oil prices.
• In other news, an angry President Trump on Monday called for his ex-personal lawyer Michael Cohen to receive a stiff prison sentence for his admitted crimes, as he accused Cohen of making up “stories to get a GREAT & ALREADY reduced deal for himself.” Trump in a Twitter tirade also accused special counsel Robert Mueller of seeking “lies” from witnesses about Trump — and praised his longtime associate Roger Stone as having the “guts” to withstand pressure from Mueller’s prosecutors to “make up stories” about the president. Trump’s latest rants came three days after lawyers for Cohen asked a judge in a court filing to give him no prison time when he is sentenced Dec. 12 in U.S. District Court in Manhattan for charges brought by Mueller and other federal prosecutors.

STOCK MARKET WRAP 

• Stocks rallied after the U.S. and China declared a truce in their trade war. Stocks in Asia saw healthy gains, notably Chinese equities. The benchmark S&P 500 Index jumped more than 1%, building on gains posted during the biggest weekly increase in almost seven years, after leaders of the two countries agreed to hold off on new tariffs and intensify trade talks. The United States expects China to take immediate action to cut tariffs on U.S. car imports and end intellectual property theft and forced technology transfers as the two countries move toward a broader trade deal, a White House official said on Monday.
• Amazon briefly became the most valuable company on Wall Street in intraday trade on Monday, days after Microsoft dethroned long-time leader Apple, ending the iPhone maker’s five-year run at the top. However, Amazon’s lead lasted only a few seconds. At the close, Apple was back on top with a 3.49 percent increase in its stock that put its total value at $877 billion. It was followed by Amazon, up 4.86 percent with a market capitalization of $866.6 billion, and then Microsoft, up 1.08 percent and a stock market value of $860.4 billion. The tight race between the trio of high-powered technology stocks coincided with a broad stock market rally after the United States and China agreed on a temporary truce in their ongoing trade dispute.