NOTABLE MOVES
As of Fri, Jan 25, 08:00 Singapore Time zone UTC+8
USDJPY, +0.00%, $109.60
EURUSD, -0.59%, $1.1314
GBPUSD, +0.39%, $1.3120
USDCAD, +0.08%, $0.6762
AUDUSD, -0.70%, $0.7092
NZDUSD, -0.37%, $0.6762
S&P500, +0.14%, 2,642.33
Nasdaq, +0.68%, 7,073.46
Nikkei Futures, -0.01%, 20,557.0
CURRENCY MARKET WRAP
- The US Senate has rejected two bills to end the government shutdown, leaving no end in sight to the record-breaking closure of federal agencies. The Republican legislation failed by 50-47 and the Democratic bill followed suit by 52-44. Both measures were long shots, needing 60 votes to pass. Afterwards, Trump told reporters at the White House that he would only sign a bill if it included a “down payment” on a border barrier.
- Weekly initial claims decreased by 13,000 to 199,000 (consensus 219,000) for the week ending January 19. That is the lowest level of initial claims since November 15, 1969. Continuing claims for the week ending January 12 dropped by 24,000 to 1.713 million. The key takeaway from the report is that the low level of initial claims is reflective of a tight labor market.
- U.S. Treasuries ended on a higher note, pushing yields lower across the curve. The 2-yr yield decreased three basis points to 2.56%, and the 10-yr yield decreased four basis points to 2.71%. The U.S. Dollar Index rose 0.4% to 96.53, benefiting at the expense of the euro, which fell on the back of Draghi’s cautious remarks. WTI crude rose 1.0% to $53.15/bbl.
- ECB’s Draghi, whose term ends in October, acknowledged on Thursday that the euro zone’s economic risks have moved to the downside. Draghi commented, “We were unanimous about acknowledging the weaker momentum and changing the balance of risk for growth.” Although there was no change in policy at Thursday’s ECB meeting, Draghi signalled the bank would react should the data continue to disappoint. The ECB gave no indication of whether it was preparing to cut interest rates, saying its governing council “expects the key ECB interest rates to remain at their present levels at least through the summer of 2019”. Eurozone growth fell to its lowest level in four years in the third quarter, with the region’s economy expanding by just 0.2 per cent. The bank had hoped in mid-December that the weakness would prove temporary. However, almost all of the data published since then has been disappointing. Thursday’s PMI data provided more signs that growth would not rebound in the fourth quarter, suggesting the economy faced more pervasive problems than initially thought.
- Elsewhere, the Aussie flipped on traders after the positive labor data release (21.6K vs Consensus 17.3K) was offset by news that NAB, one Australia’s four big banks is raising interest rates which would make mortgages more expensive and further depress the already slumping housing market.
STOCK MARKET WRAP
- The S&P 500 eked out a gain of 0.14% on Thursday as it wavered between small gains and losses throughout the day. Another round of better-than-expected corporate earnings coupled with ongoing global growth concerns contributed to a mixed session on Wall Street.
- Some discouraging commentary from Commerce Secretary Wilbur Ross and European Central Bank President Mario Draghi helped temper buying interest. Specifically, Ross said the U.S. and China are still “miles and miles” from reaching a trade deal, and Draghi acknowledged that significant stimulus is still needed for the eurozone. These comments stirred concerns about the pace of future economic growth, which in turn stirred concerns about the pace of future earnings growth.
- The Philadelphia Semiconductor Index was a notable pocket of strength on Thursday, rising 5.7% on the back of some strong earnings reports. Heavyweight component Texas Instruments (TXN 102.09, +6.60) rose 6.9%, while Lam Research (LRCX 161.20, +21.87, +15.7%), Xilinx (106.06, +16.51, +18.4%), and Teradyne (TER 36.04, +4.11, +12.9%) each surged well over 10% following their earnings reports. In addition, better-than-feared earnings and guidance from the transport stocks, particularly the airlines, helped lift the Dow Jones Transportation Average (+1.1%) and the industrial sector.
- American Airlines (AAL 33.66, +2.01, +6.4%), Southwest Air (LUV 54.21, +3.19, +6.3%), JetBlue (JBLU 18.12, +0.88, +5.1%), and Union Pacific (UNP 160.34, +6.01, +3.9%) all beat earnings and revenue estimates.
- McCormick (MKC 124.35, -14.65) ] dropped -10.5% after it missed Q4 top and bottom-line estimates and guided fiscal 2019 earnings and revenue below consensus. Its poor performance was a huge drag on the consumer staples sector (-1.3%). PG&E (PCG 13.95, +5.96, +74.6%) surged late in the day on a report that a California investigation cleared the company from issues surrounding the 2017 Tubbs wildfire.
BLOCKCHAIN & CRYPTOCURRENCY NEWS
Singapore’s Monetary Authority Halts Local STO Due to Regulatory Violations
The Monetary Authority of Singapore (MAS) has prevented a local initial coin offering (ICO) from launching a security token offering (STO) in the country. Under the current rules, all STOs have to comply with Singapore’s securities laws and are obliged to register with the MAS. In case the owners want the offering to fall under an exemption, they should be aware of conditions, including advertising restrictions, the MAS notes. The issuer of the halted, unnamed STO intended to rely on the exemption that would allow them to launch an offering without registering with the MAS. However, the issuer failed to comply with the advertising prohibition and posted a promotional article to LinkedIn. Shortly after the MAS warning, the issuer has temporarily suspended the STO. The MAS has also warned investors about the risks linked with token offerings, such as possible price speculation, the possibility of fraud and the lack of a proven track record from the companies. The financial authority urges customers to evaluate these risks before investing money.
Novogratz’s Galaxy Digital to Raise $250 Million to Offer Crypto Loans
Mike Novogratz’s crypto merchant bank Galaxy Digital is reportedly raising at least $250 million to offer loans to crypto-related firms, according to an unconfirmed report published by American news site Business Insider. Citing two unnamed people familiar with the matter, the news outlet claims that Galaxy Digital is purportedly planning to close the first fundraising round for its crypto credit fund in March. Galaxy’s lenders will be able to get their loans by using crypto assets, real estate and crypto mining hardware as deposits. Two anonymous individuals also noted that Galaxy decided to launch its own fund after seeing an increased demand for crypto lending services from firms amidst the bear market in 2018. Founded by former Goldman Sachs partner Michael Novogratz, Galaxy Digital is already lending to crypto businesses using its own balance sheet. Recently, Novogratz — who is both Galaxy’s founder and CEO — has increased his shares of the company by up to 79.3 percent of ordinary shares assuming their conversion, which reportedly amounts to 221.2 million ordinary shares.
Samsung’s Previously Denied Ethereum Wallet Surfaces in Allegedly Leaked Galaxy S10 Images
Images allegedly portraying the upcoming smartphone Samsung Galaxy S10 showing a “Samsung Blockchain Keystore” app surfaced on Twitter on Jan. 23. The reportedly leaked photos feature only an Ethereum (ETH) wallet option in the “supported cryptocurrencies” list. Even if those images portrait real software that will be present on the upcoming smartphone, it may gain support for other cryptos as the development continues before the launch. The leak seemingly confirms the rumors that Samsung has plans to offer a cryptocurrency cold wallet on this smartphone, an addition that had been denied in December last year. Samsung applied for a trademark in the United Kingdom for a cryptocurrency wallet. However, after the aforementioned trademark application, a senior executive at Samsung said in an interview with computing magazine JAX that decentralization is a more important phenomenon than blockchain.