CURRENCY MARKET WRAP
As of Thu Sep 12th, Singapore Time zone UTC+8
U.S. Dollar Index, +0.31%, 98.63
USDJPY, +0.43%, $108.01
EURUSD, -0.27%, $1.1013
GBPUSD, -0.11%, $1.2335
USDCAD, +0.25%, $1.3184
AUDUSD, +0.20%, $0.6874
NZDUSD, -0.06%, $0.6421
U.S. The Producer Price Index for final demand was up 0.1% m/m in August, as expected, but the index for final demand excluding food and energy, was up 0.3% (consensus +0.1%), which was hotter than expected.
There were few developments on Wednesday to interrupt the market’s placated views on trade and growth. Regarding trade, China released a list of U.S. products it will exempt from a higher tariff rate, although key farm products were not included. Central banks also appear on the market’s side, with China reportedly set to start an easing cycle later this month and the ECB expected to cut rates on Thursday.
The ECB has many options including a rate cut, stronger forward guidance, a new program of asset purchases and compensation for banks to relieve the negative effects of negative interest rates. They prefer a combination of measures because they feel that a package is “more effective than a sequence of selective actions.” The market expects a minimum of a 10bp rate cut. If the central bank combines this with rate tiering or a new Quantitative Easing program, Euro will sell off aggressively but if all they do is cut rates and strengthen their low rate pledge, Euro will soar in disappointment.
Oil took a hit on reports that President Trump was in talks to ease sanctions on Iran. OPEC also downgraded its forecasts for oil demand in 2019 and 2020. The continued rise in Treasury yields reflected some of the improved sentiment on Wall Street, as investors showed less interest for the safe-haven asset. The 2-yr yield increased one basis point to 1.67%, and the 10-yr yield increased three basis points to 1.73%. The U.S. Dollar Index advanced 0.31% to 98.63.
STOCK MARKET WRAP
S&P500, +0.72%, 3,000.93
Nasdaq, +1.06%, 8,169.68
Nikkei Futures, +1.25%, 21,617.5
S&P 500 advanced 0.72% on this 18th anniversary of 9/11, boosted by strength in growth and value stocks alike. Apple (AAPL 223.59, +6.89, +3.2%)carried the benchmark index back to the 3000 level and helped boost the Dow Jones Industrial Average (+0.9%) and Nasdaq Composite (+1.06%) to solid gains.
Apple provided the leadership in the tech sector, and broader market, as investors and (some) analysts remained content with its product event yesterday. Needham raised its AAPL price target to $250 from $225, while Maxim Group lowered its AAPL price target to $204 from $211. Strength in Apple trickled over to the Philadelphia Semiconductor Index (+1.5%).