CURRENCY MARKET WRAP
As of Tue 14 Jan, Singapore Time zone UTC+8
U.S. Dollar Index, +0.02%, 97.38
USDJPY, +0.42%, $110.01
EURUSD, +0.16%, $1.1135
GBPUSD, -0.44%, $1.2987
USDCAD, -0.08%, $1.3056
AUDUSD, -0.04%, $0.6898
NZDUSD, -0.18%, $0.6625
Monday’s economic data was limited to the Treasury Budget for December, which showed a deficit of $13.3 billion (consensus -$15.0 billion) versus a deficit of $13.5 billion in the same period a year ago. The budget deficit over the last 12 months is $1.022 trillion versus $1.022 trillion in November.
Yesterday’s good risk appetite could be attributed to several factors: 1) the positive price action buoying sentiment, 2) expectations that the upcoming earnings season will include reassuring guidance, 3) news the U.S. will remove China from its currency manipulator list, thereby improving trade relations and possibly economic growth prospects, and 4) little negative news to derail sentiment.
U.S. Treasury Department on Monday dropped its designation of China as a currency manipulator days before top officials were due to sign a preliminary trade agreement. In its latest currency report, the Treasury said that as part of the Phase 1 trade deal, China had made “enforceable commitments to refrain from competitive devaluation” and agreed to publish relevant data on exchange rates and external balances.
U.S. Treasuries finished slightly lower in a tight-ranged session. The 2-yr yield and the 10-yr yield increased two basis points each to 1.58% and 1.85%, respectively. The U.S. Dollar Index finished flat at 97.38. WTI crude fell 1.5%, or $0.87, to $58.12/bbl.
STOCK MARKET WRAP
S&P500, +0.70%, 3,288.13
Nasdaq, +1.04%, 9,273.93
Nikkei Futures, +1.01%, 23,955.0
Ten of the 11 S&P 500 sectors pushed higher, with leadership coming from the materials (+1.4%), information technology (+1.3%), and real estate (+1.2%) sectors. Apple (AAPL 316.96, +6.63, +2.1%) remained an influential force after its price target was raised to $375 from $300 at D.A. Davidson.
High-growth stocks remained in favor, too, particularly Tesla (TSLA 524.86, +46.71, +9.8%), lululemon athletica (LULU 245.18, +10.34, +4.4%), and Beyond Meat (BYND 114.34, +18.27, +19.0%). Tesla had its price target raised to $612 from $385 at Oppenheimer. Lululemon raised its Q4 EPS, revenue, and comparable sales guidance.
The health care sector (-0.4%) was the lone holdout amid disappointing guidance from Abiomed (ABMD 168.10, -20.96, -11.1%), weakness in the insurance stocks after Senator Bernie Sanders (I-VT) took the lead in the latest poll in Iowa, and a relatively quiet first day at the JPMorgan Healthcare Conference.