Currency Market Wrap
As of Fri, Jun 21st, Singapore Time zone UTC+8
Dollar Index -0.52%, 96.61
USDJPY, -0.76%, $107.31
EURUSD, +0.52%, $1.1295
GBPUSD, +0.41%, $1.2708
USDCAD, -0.65%, $1.3184
AUDUSD, +0.51%, $0.6921
NZDUSD, +0.42%, $0.6582
Monetary policy is getting more dovish and sovereign bond yields continue to decline around the world. Bank of Japan kept monetary policy steady on Thursday but Governor Haruhiko Kuroda signaled readiness to ramp up stimulus as global risks cloud the economic outlook, joining U.S. and European central banks in dropping hints of additional easing. BOJ maintained its short-term rate target at -0.1% and a pledge to guide 10-year government bond yields around zero percent. Seeking to dispel concerns the BOJ has run out of ammunition, Kuroda said the central bank could combine interest rate cuts with bigger asset buying if needed to keep the economy on track to achieve its elusive 2 percent inflation target.
The Bank of England warned the economic outlook for the UK is weakening but left its main rate of interest unchanged at 0.75% on Thursday. The committee voted unanimously to keep rates on hold at 0.75%, adding that its consensus view was that further rate rises were likely to be required “at a gradual pace and to a limited extent”. The minutes of June’s MPC meeting highlight the unease felt inside the BoE over its assumption that there would be a smooth Brexit with little disruption. Markets viewed the minutes as mildly dovish, with traders raising the probability of a cut in interest rates by November to 19% from 12% a few days ago, according to the BoE Watch Tool run by the Chicago Mercantile Exchange.
Expectations for lower rates remained the biggest driver in the equity and bond markets. The 10-yr note yield and the 2-yr note yield declined three basis points each to 1.72% and 2.00%, respectively. The lower yields put some pressure on the U.S. dollar (96.61, -0.52%) and continued to favour risk assets.
Stock Market Wrap
S&P500, +0.95%, 2,954.18
Nasdaq, +0.92%, 7,738.06
Nikkei Futures, +0.72%, 21,423.0
S&P 500 advanced 0.95% on Thursday, setting a new intraday high and new record close, bolstered by expectations for easier monetary policy and lower sovereign bond yields. The S&P 500 energy sector led all sectors higher with a gain of 2.2%. The other ten sectors finished with gains between 0.4% (health care) and 1.6% (industrials). The turnaround in the S&P 500 financials sector (+0.5%), which was down as much as 0.6% during the day, contributed to the strong finish in the broader market.
In corporate news, Slack (WORK 38.62, +12.62, +48.5%) made its public debut, opening at $38.50 per share after the NYSE set its reference price at $26 per share. Oracle (ORCL 56.99, +4.31, +8.2%) pleased investors with solid earnings results, while Carnival (CCL 48.80, -4.04, -7.7%) disappointed investors with weak full-year guidance.