CURRENCY MARKET WRAP
As of Thu 12 Dec, Singapore Time zone UTC+8
U.S. Dollar Index, -0.23%, 97.385
USDJPY, -0.14%, 108.56
EURUSD, +0.36%, 1.1133
GBPUSD, +0.33%, 1.3199
USDCAD, -0.03%, 1.3234
AUDUSD, +0.87%, 0.6869
NZDUSD, +0.55%, 0.6581
U.S. CPI increased 0.3% month-over-month in November (consensus +0.2%) and core CPI, which excludes food and energy, increased 0.2%, as expected, for the second straight month.
The FOMC voted unanimously to leave the target range for the fed funds rate at 1.50-1.75%, as was widely expected. Thus, the positive reaction in the market may have been more attributed to the median projection for the policy rate in 2020 signaling no change. Powell for his part reiterated he would need to see a persistent and significant rise in inflation to hike rates.
Generally, yesterday’s Fed news was viewed favorably, but several upcoming events likely helped restrain risk sentiment. Coming up are an ECB policy decision and UK election later today and another round of tariffs on Chinese imports on Sunday, which may or may not happen. The trade uncertainty presumably had more influence on sentiment.
U.S. Treasuries, which were already trending higher before the FOMC announcement, extended gains during Powell’s press conference. Both the 2-yr yield and 10-yr yield declined four basis points each to 1.61% and 1.79%, respectively, with investors presumably unconcerned about inflation. The U.S. Dollar Index fell 0.3% to 97.10. WTI crude fell 0.8% (-0.47) to $58.74/bbl.
STOCK MARKET WRAP
S&P500, +0.32%, 3,146.12
Nasdaq, +0.61%, 8,414.62
Nikkei Futures, -0.08%, 23,391.86
The broader advance was kept in check, though, with the S&P 500 materials (+0.7%), information technology (+0.7%), and industrials (+0.7%) sectors finishing atop the standings. The real estate (-0.8%), financials (-0.2%), and energy (-0.2%) sectors finished in negative territory.
The trade-sensitive Philadelphia Semiconductor Index (+2.2%) posted an outsized gain. All 30 components finished higher, as the space likely drew support from the positive results and upbeat guidance from Photronics (PLAB 15.13, +2.56, +20.4%).
Dow components Home Depot (HD 212.00, -3.90, -1.8%) and Chevron (CVX 116.22, -1.67, -1.4%) weighed on the price-weighted index amid some negative news. Home Depot provided preliminary FY20 sales guidance that was below expectations. Chevron announced an $11 billion write-down of its gas assets in the fourth quarter.