Market Brief: Optimism Over Potential Brexit and US-China Deals Rules the Day

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.

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