CURRENCY MARKET WRAP
As of Wed Nov 7th, Singapore Time zone UTC+8
U.S. Dollar Index, -0.03%, 97.95
USDJPY, -0.22%, $108.92
EURUSD, -0.05%, $1.1070
GBPUSD, -0.23%, $1.2855
USDCAD, +0.21%, $1.3183
AUDUSD, -0.25%, $0.6877
NZDUSD, -0.15%, $0.6366
U.S. Nonfarm business sector labor productivity declined 0.3% in the third quarter (consensus +1.0%), according to the BLS, after increasing an upwardly revised 2.5% (from 2.3%) in the second quarter. Unit labor costs jumped 3.6% (consensus +2.1%) after increasing a downwardly revised 2.4% (from 2.6%) in the second quarter. It points to profit margin pressures for businesses with the decline in productivity and the jump in unit labor costs.
In trade, Reuters reported that a “Phase One” trade agreement may not get signed until December, as both sides continue to discuss terms and a venue. The news took the market to session lows, but it didn’t get the pullback some had been expecting. This might have been due to expectations for a partial deal to still get signed and a view that there is some pent-up demand among under-allocated investors. The S&P 500 energy sector, however, did succumb to a 2.3% pullback following disappointing earnings results and guidance from Diamondback Energy (FANG 77.20, -13.03, -14.4%) and a decline in oil prices ($56.35, -0.89, -1.6%).
U.S. Treasuries finished the session on a higher note, having received increased demand following the latest trade update. The 2-yr yield declined three basis points to 1.60%, and the 10-yr yield declined five basis points to 1.81%. The U.S. Dollar Index remained little changed at 97.95.
STOCK MARKET WRAP
S&P500, +0.07%, 3,076.78
Nasdaq, -0.29%, 8,410.63
Nikkei Futures, -0.23%, 23,267.5
The stock market closed little changed on Wednesday, marking its second straight pause near record highs as investors digested a possible pushback in the timeline for a trade deal.
The health care and consumer staples sectors can also credit their relative strength to the gains in CVS Health (CVS 70.93, +3.61, +5.4%), Humana (HUM 304.94, +10.19, +3.5%), and Coty (COTY 13.02, +1.56, +13.6%) following their positive earnings results and encouraging guidance.
In notable M&A activity, Xerox (XRX 37.66, +1.29, +3.6%) is reportedly considering a cash-and-stock bid for HP, Inc. (HPQ 19.57, +1.17, +6.4%). An offer would value HP at a premium at just under $23 per share, according to The Wall Street Journal.