CURRENCY MARKET WRAP
As of Tue, Apr 2, Singapore Time zone UTC +8
Dollar Index +0.10%, $97.34
USDJPY, +0.54%, $111.46
EURUSD, -0.16%, $1.1206
GBPUSD, +0.26%, $1.3067
USDCAD, -0.24%, $1.3314
AUDUSD, +0.18%, $0.7110
NZDUSD, +0.04%, $0.6807
A trifecta of better data out of Asia helped fuel a risk on rally in FX at the start of the week with high beta currencies gapping higher on the open and USDJPY pushing through the 111.00 figure.
In China, the PMI Manufacturing report rose back above the 50 boom/bust level its best one month rise since 2012 (actual 50.8; expected 50.1; prior 49.9). In Korea and Japan, the PMI readings also rose from the month prior although those indices remained in contractionary territory. Japan’s Nikkei and IHS Markit manufacturing purchasing managers’ index for March rose to 49.2 from 48.9 in February, helped by a lift in new orders. South Korea’s PMI rose to 48.8 from 47.2 in the previous month.
In Brexit, members of Parliament had another chance to break the political stalemate. But they rejected all four Brexit options, including a second referendum and a customs union. On Monday, just four options were on the ballot, most of them the finalists from the first round, with some tweaks. The hope was that now, with fewer choices and time running out ahead of the April 12 Brexit deadline, MPs would rally behind a particular plan and offer up a Brexit compromise that could end the political stalemate and uncertainty.
Parliament punted on its chance to direct the Brexit process. Now, the UK has to decide whether it will leave the European Union on April 12 without any deal in place, or seek a much longer extension. May is expected to hold a marathon Cabinet meeting later today, where her government will likely lay out next steps.
STOCK MARKET WRAP
S&P500, +1.16%, 2,867.19
Nasdaq, +1.35%, 7,478.42
Nikkei Futures, +0.86%, 21,733.0
The stock market followed Friday’s strong close to the first quarter with an even stronger start to the second quarter. The S&P 500 climbed 1.16% to a fresh high for the year while the Dow Jones Industrial Average (+1.3%) and the Nasdaq Composite (+1.35%) outperformed. Equity futures jumped out of the gate after better than expected China’s Manufacturing PMI reinforced the idea that global economic activity is rebounding.
The broader industrials sector gained 2.1%, but finished behind financials (+2.4%). The economically-sensitive group benefited from weakness in Treasuries, which sent the 10-yr yield higher by eight basis points to 2.50%. This helped expand the spread between the 3-month bill yield and the 10-yr note yield to 11 basis points from three basis points at the end of Friday’s session.
On the commodity side, crude oil jumped 2.3% to a fresh 2019 high at $61.59/bbl with the 200-day moving average (61.66) looming just above.
News of impending price cuts at Amazon-owned (AMZN 1814.19, +33.44, +1.9%) Whole Foods weighed on Kroger (KR 24.48, -0.12, -0.5%) in afternoon trade.