CURRENCY MARKET WRAP
As of Mon 6 Jan, Singapore Time zone UTC+8
U.S. Dollar Index, -0.01%, 96.84
USDJPY, -0.45%, $108.09
EURUSD, -0.11%, $1.1160
GBPUSD, -0.44%, $1.3088
USDCAD, +0.16%, $1.3001
AUDUSD, -0.60%, $0.6952
NZDUSD, -0.55%, $0.6665
ISM Manufacturing Index for December registered a 47.2% reading (consensus 49.0%). That was below the 48.1% reading for November, the fifth straight sub-50.0% reading, and the lowest level for the index since June 2009. Total construction spending increased 0.6% m/m in November (consensus +0.3%) on the heels of an upwardly revised 0.1% increase (from -0.8%) in October. Residential spending was up 1.8% m/m and nonresidential spending was down 0.3% m/m.
Risk Assets sold off after U.S. airstrike killed Iran’s top military commander, General Suleimani, prompting retaliatory threats from Iran.Trump said the U.S. was not trying to start a war or seek regime change in Iran, but the situation did provide an excuse for investors to reduce exposure from a market trading at record highs. In addition, the weakest reading for the ISM Manufacturing Index since June 2009, which declined to 47.2% in December (consensus 49.0%) from 48.1% in November, also helped restrain risk sentiment.
Separately, the FOMC Minutes from the Dec. 10-11 meeting went largely unnoticed, which wasn’t surprising considering that the 2019 committee viewed policy as appropriate unless the economic outlook changes.
The 2-yr yield fell six basis points to 1.51%, and the 10-yr yield fell nine basis points to 1.79%. The U.S. Dollar Index increased 0.01% to 96.84.
STOCK MARKET WRAP
S&P500, -0.71%, 3,234.85
Nasdaq, -0.79%, 9,020.77
Nikkei Futures, -1.76%, 23,692.5
Given the geopolitical angst, investors also saw opportunities in WTI crude ($63.03, +1.88, +3.1%) on possible disruptions to production and in the iShares Dow Jones U.S. Aerospace & Defense ETF (ITA 229.98, +2.60, +1.1%) on speculation of increased government spending. Gold futures increased 1.6% to $1552.40/ozt.
Notable stocks included Tesla (TSLA 443.01, +12.75, +3.0%) after it beat fourth quarter delivery estimates, Lamb Weston (LW 93.56, +9.47, +11.3%) after it beat top and bottom-line estimates, and Incyte (INCY 77.90, 8.07, -9.4%) after providing disappointing results for a promising drug candidate.