CURRENCY MARKET WRAP
As of Fri Oct 4th, Singapore Time zone UTC+8
U.S. Dollar Index, -0.12%, 98.91
USDJPY, -0.29%, $106.86
EURUSD, +0.13%, $1.0974
GBPUSD, +0.30%, $1.2339
USDCAD, +0.08%, $1.3334
AUDUSD, +0.60%, $0.6745
NZDUSD, +0.49%, $0.6300
U.S. ISM Non-Manufacturing Index for September fell to 52.6% (consensus 55.4%) from 56.4% in August. The key takeaway from the report is that it shows a slowdown in non-manufacturing growth. Accordingly, it is fanning concerns that the manufacturing recession, and trade uncertainty, are having a broader effect on the consumer-oriented services sector.
The 2-yr yield dropped ten basis points to 1.38%, and the 10-yr yield dropped seven basis points to 1.53%. The U.S. Dollar Index declined 0.12% to 98.91. WTI crude lost 0.5%, or $0.20, to $52.4/bbl.
The yield on the fed-funds sensitive 2-yr note fell to its lowest level since September 2017, as expectations for additional rate cuts continued to increase. According to the CME FedWatch Tool, the probability for a 25-basis points cut at the October FOMC meeting is about 90%, and a further quarter-point cut in December is over 50%. Both are up considerably from last week.
STOCK MARKET WRAP
S&P500, +0.80%, 2,910.63
Nasdaq, +1.12%, 7,872.27
Nikkei Futures, -1.74%, 21,332.5
The S&P 500 dropped as much as 1.1% on Thursday after the ISM Non-Manufacturing Index for September came in weaker than expected, but the market quickly bounced back while rate-cut expectations increased. The benchmark index ended the day up 0.8%, finishing near session highs to recoup some losses from a two-day drop.
All 11 S&P 500 sectors rallied off their lows and finished in the green. The energy (+1.3%), information technology (+1.2%), and real estate (+1.2%) sectors outperformed, as did the Philadelphia Semiconductor Index (+1.7%). The financials sector (+0.2%) squeezed out a last-minute gain, even as Treasury yields continued to decline.
Corporate news included Facebook (FB 179.38, +4.78, +2.7%) announcing a camera-first messaging app, named Threads, for its Instagram platform. Shares of Snap (SNAP 14.30, -0.50) fell 3.4% in response. PepsiCo (PEP 137.93, +3.99, +3.0%) reported positive earnings results. Constellation Brands (STZ 194.26, -12.53, -6.1%) did, too, but shares still declined. Tesla (TSLA 233.03, -10.10, -4.2%) reported record Q3 deliveries but missed estimates.