Market Brief: Optimism Over Potential Brexit and US-China Deals Rules the Day
Matt Weller, CFA, CMT October 11, 2019 4:00 AM
See a summary of the top market themes and trends from today's US trading session!
- Risk assets rallied today on hopes for a deal on both Brexit and US-China trade. UK PM Johnson had a “positive and promising” meeting with Irish PM Varadkar, stoking optimism that the UK and EU will be able to reach a deal next week (prediction markets remain skeptical).
- Separately, reports suggested there was a chance of a partial trade deal around agricultural purchases and currency levels between the US-China. While it would be far from the “big”, all-encompassing deal that President Trump has expressed a desire for, any progress would be better than traders expected earlier this week.
- FX: The pound was by far the strongest major currency on the day, rising by more than 1.5% against its major rivals. The yen was the weakest major currency in risk-off trade.
- US data: In another sign of a potentially slowing economy, US CPI came in at +1.7% y/y, below the 1.8% reading expected. Core CPI (ex food and energy) came in at 2.4% y/y as expected. That said, initial jobless claims dropped to 210k vs. 219k expected and previous, as the US labor market remains an economic bright spot.
- Commodities: Gold dropped -1% on the day on declining safe haven demand, while oil tacked on more 2% today.
- US indices closed higher on the day, though off their highest levels.
- Energy (XLE) was the strongest sector on the day, boosted by the big rally in oil prices. Utilities (XLU) were the weakest.
- Stocks on the move:
- Utility PG&E (PCG) dumped -29% after a judge ruled to allow bondholders to push for the company’s bankruptcy.
- Delta Airlines (DAL) dropped -2% after issuing weaker-than-expected guidance for next quarter.
- Ra Pharmaceuticals (RARX) exploded 101% higher after Belgian pharmaceutical company UCB agreed to acquire the company for $2.5B.
- Kroger (KR) shed -3% after an analyst at Jefferies criticized the grocer’s investment in Ocado.
- Retailer Bed, Bath, and Beyond (BBBY) rocketed 21% higher after announcing former Target executive Mark Tritton as CEO.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.