CURRENCY MARKET WRAP
As of Tue Oct 2nd, Singapore Time zone UTC+8
U.S. Dollar Index, -0.23%, 99.15
USDJPY, -0.30%, $107.75
EURUSD, +0.32%, $1.0934
GBPUSD, +0.02%, $1.2292
USDCAD, -0.17%, $1.3218
AUDUSD, -0.63%, $0.6708
NZDUSD, -0.32%, $0.6243
U.S. Total construction spending increased 0.1% m/m in August (consensus +0.4%) following a downwardly revised unchanged reading (from +0.1%) for July.
Risk-Assets remained resilient in early trading, as investors brushed aside another set of weak manufacturing PMIs out of Japan (48.9 vs consensus 49.3) and the eurozone (41.7 vs consensus 41.4). Investors expecting the U.S. to remain resilient in the face of global weakness were disappointed after the ISM Manufacturing Index for September declined to 47.8% (consensus 50.2%) from 49.1% in August for its worst reading since June 2009.
RBA cuts rate by 25bps to 0.75 per cent (as expected). Lowe said the global appetite to save is high relative to the appetite to invest, this has prompted low interest rates globally, which is in turn affecting the global economy. The RBA governor said this issue was a task “for governments and businesses, not for central banks”
Growth concerns were made apparent across other capital markets, too. Demand for Treasuries increased, pulling yields down from early highs; oil prices ($53.60/bbl, -0.52, -1.0%) erased gains and finished lower again; and gold futures ($1488.70/ozt, +15.40, +1.1%) increased in value. The 2-yr yield declined six basis points to 1.56%, and the 10-yr yield declined three basis points to 1.64%. The 10-yr note yield hit 1.75% at its high after a weak 10-yr debt auction in Japan caused a sell-off in Japanese bonds that trickled over to sovereign debt in Europe and the U.S. The U.S. Dollar Index declined 0.23% to 99.15.
STOCK MARKET WRAP
S&P500, -1.23%, 2,940.25
Nasdaq, -1.13%, 7,908.69
Nikkei Futures, -0.18%, 21,720.0
The stock market gave back more than 1% on Tuesday, as weak manufacturing data for September revived growth concerns that forced investors to reconsider valuations. Today’s 1.23% decline in the S&P 500 sent it below its 50-day moving average (2948) on a closing basis.
All 11 S&P 500 sectors finished lower, with the cyclical industrials (-2.4%), materials (-2.3%), energy (-2.3%), and financials (-2.1%) sectors bearing the brunt of the damage. Even the defensive-oriented, yet richly valued, consumer staples (-0.3%) and utilities (-0.3%) sectors finished lower. This was partly due to lingering doubts if the U.S. consumer would remain resilient, given the weakening employment conditions in the manufacturing sector.
Another notable story was Charles Schwab (SCHW 37.76, -4.07, -9.7%) announcing it will eliminate commissions for stocks, ETFs, and options listed on U.S. or Canadian exchanges. Shares of E*Trade (ETFC 36.51, -7.18, -16.4%) and TD Ameritrade (AMTD 34.64, -12.06, -25.8%), which derive more of their revenue from trading fees than Schwab, plunged accordingly.