CURRENCY MARKET WRAP
As of Wed Nov 6th, Singapore Time zone UTC+8
U.S. Dollar Index, +0.42%, 97.91
USDJPY, +0.51%, $109.14
EURUSD, -0.47%, $1.1076
GBPUSD, -0.05%, $1.2883
USDCAD, -0.01%, $1.3151
AUDUSD, +0.12%, $0.6892
NZDUSD, -0.41%, $0.6377
U.S. ISM Non-Manufacturing Index for October increased to 54.7 (consensus 53.3) from 52.6 in September. U.S trade deficit narrowed slightly in September to $52.5 billion, as expected, from a downwardly revised $55.0 billion (from -$54.9 billion) in August. It wasn’t a narrowing driven necessarily by stronger demand, imports (-$4.4 billion) and exports (-$1.8 billion) both declined month-over-month, so the narrowing was simply a function of imports falling more than exports.
In trade, reports indicated that the U.S. is considering removing the 15% tariff rate that went into effect in September and could possibly delay the tariffs in place for December. China, however, reiterated it would want the U.S. to remove all retaliatory tariffs imposed since last year and for the U.S. to be firmer in its commitments to remove them. It’s a tough ask, but the market presumably understood that negotiations are ongoing and it shouldn’t conclude that a “Phase One” deal won’t get signed based on these reports.
The 2-yr yield rose four basis points to 1.63%, and the 10-yr yield rose eight basis points to 1.87%. The U.S. Dollar Index increased 0.42% to 97.91. WTI crude rose 1.0%, or $0.55, to $57.24/bbl.
RBA held interest rates at the historic low of 0.75 per cent (as expected). The futures market forecast a less than 10 per cent chance of a cut and no longer has a full 25 basis point cut priced in over its 18-month horizon. RBA governor Philip Lowe noted in his post-decision statement the outlook for the Australian economy is little changed from three months ago.
STOCK MARKET WRAP
S&P500, -0.12%, 3,074.62
Nasdaq, +0.02%, 8,434.68
Nikkei Futures, +0.58%, 23,337.5
S&P 500 shed 0.12% on Tuesday in a mixed session that saw more trade headlines and a further increase in Treasury yields. The Dow Jones Industrial Average (+0.1%), Nasdaq Composite (+0.01%), and Russell 2000 (+0.1%) finished just above their flat lines.
Walgreens Boots Alliance (WBA 61.21, +1.56, +2.6%) and Kroger (KR 27.83, +2.84, +11.4%) were some notable gainers in the consumer staples sector (+0.3%). Walgreens held preliminary discussions with private equity firms about a leveraged buyout, according to Reuters, while Kroger issued upbeat FY20 guidance following an encouraging update on its “Restock Kroger” initiative.
Adobe Systems (ADBE 289.29, +11.79, +4.3%) also provided shareholders with upbeat FY20 guidance. Shares rose accordingly, while shares of Uber (UBER 28.02, -3.06, -9.9%) and Peloton (PTON 22.74, -1.87, -7.6%) dropped despite better-than-expected results and decent guidance. Shake Shack (SHAK 66.83, -17.38, -20.6%) plunged 21% on disappointing guidance.