CURRENCY MARKET WRAP
As of Wed 22 Jan, Singapore Time zone UTC+8
U.S. Dollar Index, 0.00%, 97.61
USDJPY, -0.25%, $109.91
EURUSD, -0.09%, $1.1085
GBPUSD, +0.27%, $1.3046
USDCAD, +0.18%, $1.3072
AUDUSD, -0.37%, $0.6848
NZDUSD, -0.21%, $0.6595
Asian equities were hit the hardest on Tuesday, as the virus outbreak originated in China, while the initial selling in the U.S. stock market was modest. The virus, which can be transmitted between people and has no current vaccine, fostered a narrative that economic activity could be slowed down by people deciding to refrain from public spheres like travel and shopping.
At a two-day rate review that ended on Tuesday, the BOJ kept its short-term interest rate target at -0.1% and a pledge to guide 10-year government bond yields around 0%. In a quarterly review, the BOJ also revised up its growth projection for the fiscal year beginning April 2020 to 0.9% from 0.7%, helped by the government’s fiscal package, and hiked its estimate for 2021.
The 2-yr yield fell four basis points to 1.52%, and the 10-yr yield fell seven basis points to 1.77%. The U.S. Dollar Index finished flat at 97.61. WTI crude declined 0.5%, $0.30, to $58.25/bbl.
STOCK MARKET WRAP
S&P500, – 0.27%, 3,320.79
Nasdaq, -0.19%, 9,370.81
Nikkei Futures, -1.13%, 23,807.5
Cyclical sectors were among today’s laggards, particularly the S&P 500 energy (-1.9%), materials (-1.1%), and industrials (-1.1%) sectors. The latter was weighed by the disappointment in top-weighted Boeing. The rate-sensitive real estate (+1.1%) and utilities (+0.8%) sectors outperformed, as demand for Treasuries drove yields lower.
Other notable areas included the Dow Jones Transportation Average, which fell 1.8% amid weakness in the airline stocks, and the iShares U.S. Home Construction ETF (ITB 47.80, +0.60), which rose 1.3% on the idea that the lower Treasury yields will drive mortgage rates lower.
Separately, Tesla (TSLA 547.20, +36.70, +7.2%), Costco (COST 313.26, +8.58, +2.8%), Visa (V 207.29, +2.59, +1.3%), and Intel (INTC 60.55, +0.95, +1.6%) benefited from positive-minded analyst recommendations. Uber (UBER 37.60, +2.47, +7.0%) hit a five-month high after the company sold its food delivery business in India.