CURRENCY MARKET WRAP
As of Fri Oct 18th, Singapore Time zone UTC+8
U.S. Dollar Index, -0.41%, 97.60
USDJPY, -0.17%, $108.58
EURUSD, +0.47%, $1.1125
GBPUSD, +0.26%, $1.2865
USDCAD, -0.50%, $1.3137
AUDUSD, +0.99%, $0.6825
NZDUSD, +0.99%, $0.6354
U.S. Total housing starts declined a disappointing 9.4% m/m in September to a seasonally adjusted annual rate of 1.256 million (consensus 1.306 million). Building permits declined 2.7% to a seasonally adjusted annual rate of 1.387 million (consensus 1.350 million). Industrial production declined 0.4% m/m in September (consensus -0.3%) on the heels of an upwardly revised 0.8% increase (from 0.6%) in August. Total capacity utilisation dropped to 77.5% (consensus 77.7%) from 77.9% in August. Philadelphia Fed Index for October checked in at 5.6 (consensus 6.0) versus 12.0 in September.
U.S. Treasuries finished the session on a lower note. The 2-yr yield increased two basis points to 1.61%, and the 10-yr yield increased one basis point to 1.76%. The U.S. Dollar Index declined 0.41% to 97.60. WTI crude rose 0.9%, or $0.47, to $53.89/bbl despite crude inventories rising more than expected in the EIA’s weekly inventory report.
In Brexit, UK finally convinced the EU to endorse their Brexit withdrawal agreement. When the announcement was made, Sterling jumped more than 1.32% in a matter of minutes. However it sold off just as quickly as investors turned their focus to the odds of Parliamentary approval. Boris Johnson insisted he is “very confident” that his Brexit deal will be approved by the House of Commons in a historic knife-edge vote on Saturday, even without the backing of the DUP. Without the DUP’s 10 MPs, Johnson is likely to need the support of some Labour MPs and the 21 Conservatives he expelled from the parliamentary party for backing the Benn act last month.
If they approve the new withdrawal agreement, there are 2 paths. Parliament fast tracks the deal into UK law and they leave the EU on October 31st as scheduled or they get a technical extension to debate the details and set a new date for departure. In the EU’s eyes, a deal is done so they’ll agree to any extension.
STOCK MARKET WRAP
S&P500, +0.28%, 2,997.95
Nasdaq, +0.40%, 8,156.85
Nikkei Futures, +0.12%, 22,517.5
S&P 500 advanced 0.28% on Thursday, as investor sentiment remained relatively upbeat following another batch of decent earnings reports and news of a draft Brexit deal.
Gains were still registered in ten of the 11 S&P 500 sectors, though, with the lone exception being information technology (-0.2%) after IBM (IBM 134.26, -7.85, -5.5%) missed revenue estimates. The health care (+0.8%), real estate (+0.7%), and communication services (+0.6%) sectors outperformed the broader market.
In the industrials sector (+0.5%), positive reactions to results from Honeywell (HON 167.55, +3.92, +2.4%), CSX (CSX 69.78, +0.78, +1.1%), United Rentals (URI 127.92, +6.25, +5.1%), and Dover (DOV 101.38, +5.56, +5.8%) outweighed the relative weakness in the defense stocks after Textron (TXT 47.79, -2.68, -5.3%) commented about lower defense volume.
The health care space outperformed on optimism that a $50 billion package offered by five companies could settle the opioid lawsuits. Companies involved include Johnson & Johnson (JNJ 136.17, +1.00, +0.7%), Teva Pharma (TEVA 7.77, +0.82, +11.8%), McKesson (MCK 150.51, +5.67, +3.9%), Cardinal Health (CAH 51.21, +2.14, +4.4%), and AmerisourceBergen (ABC 89.50, +3.45, +4.0%).
In other earnings news, Netflix (NFLX 293.35, +7.07, +2.5%) provided results that were construed as better than feared. Shares gained 2.5% but were up as much as 7.9% intraday. Morgan Stanley (MS 43.44, +0.65, +1.5%) topped expectations.