CURRENCY MARKET WRAP
As of Thu Nov 14th, Singapore Time zone UTC+8
U.S. Dollar Index, -0.01%, 98.31
USDJPY, -0.20%, $108.81
EURUSD, -0.02%, $1.1010
GBPUSD, +0.07%, $1.2854
USDCAD, +0.15%, $1.3253
AUDUSD, -0.04%, $0.6840
NZDUSD, +1.33%, $0.6415
U.S. Total CPI was up 0.4% m/m in October (consensus +0.3%), driven largely by higher energy costs, while core CPI, which excludes food and energy, increased 0.2%, as expected. The monthly changes left the yr/yr changes at 1.8% for total CPI (up from 1.7% previously) and 2.3% for core CPI (down from 2.4% previously).
The Wall Street Journal published two separate reports on trade. The first one stated the U.S. remains hesitant on removing existing tariffs on imported goods from China. The second report outlined China’s unwillingness to commit to purchasing a specific amount of farm goods and its resistance to agree to enforcement mechanisms.
Many of the cyclical sectors within the S&P 500 subsequently underperformed, but the broader market remained resilient to any sort of pullback. This might have been due to the market still expecting a “Phase One” deal to get signed and Powell upholding the market’s positive view on monetary policy in the first part of his two-day congressional testimony
U.S. Treasuries finished the session higher as part of the defensive trade today. The 2-yr yield declined two basis points to 1.63%, and the 10-yr yield declined four basis points to 1.87%. The U.S. Dollar Index finished little changed at 98.31. WTI crude increased 0.4% (+$0.23) to $57.08/bbl.
Kiwi and wholesale interest rates spiked higher after the Reserve Bank left its official cash rate (OCR) unchanged at 1 per cent. Market expectations were weighted towards a rate cut at the monetary policy statement. The Reserve Bank, in its statement, said further monetary stimulus would be added if needed. It said employment remained around its maximum sustainable level while inflation remained below the 2 per cent target mid-point but within its target range. “Economic developments since the August statement do not warrant a change to the already stimulatory monetary setting at this time,” it said. The statement by the RBNZ came as a surprise to traders who priced in a high probability of a rate cut, the knee-jerk price action was a result of positions unwinding.
STOCK MARKET WRAP
S&P500, +0.07%, 3,094.04
Nasdaq, -0.05%, 8,482.10
Nikkei Futures, -0.02%, 23,322.5
S&P 500 (+0.07%) and Dow Jones Industrial Average (+0.3%) closed at record highs on Wednesday, even as trade reports revealed that the U.S. and China continue to waver on familiar issues. Walt Disney (DIS 148.72, +10.14, +7.3%) deserves some credit, with shares rising more than 7% after it said 10 million users have already signed up for Disney+.
Risk sentiment was manifested more conservatively in the defensive-oriented utilities (+1.5%), real estate (+1.1%), and consumer staples (+0.9%) sectors. The financials (-0.6%), energy (-0.5%), materials (-0.5%), industrials (-0.4%), and consumer discretionary (-0.4%) sectors finished in negative territory.
The communication services (+0.4%) and information technology (+0.3%) sectors also finished higher, largely due to the continued outperformance in shares of Apple (AAPL 264.47, +2.51, +1.0%) and Disney. Apple was initiated with an Outperform rating at RBC Capital Mkts with a price target of $295.
Separately, Nike (NKE 91.29, +1.79, +2.0%) said it will stop selling products directly to Amazon (AMZN 1753.11, -24.89, -1.4%). On a related note, Nike was initiated with an Overweight rating at Barclays with a price target of $111.