Macro: Sandcastle economics
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Summary: Treasuries rallied on larger-than-expected jobless claims, softening yields, and pushing USDJPY down to 150.40. AUDUSD dipped below 0.65 due to a higher unemployment rate. Crude oil plummeted nearly 5%, with Brent at $77. Intel surged 6.8% on an analyst upgrade, while Cisco dropped 9.8%, and Walmart fell 8.1% after reporting earnings with a downbeat outlook. Alibaba's ADS tumbled 9.2% on a share disposal plan by Jack Ma’s family trust, scrapping the Cloud spinoff, and weak Cloud revenue growth. Hang Seng Index Futures extended losses by 1.5% overnight.
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
US Equities: In a mixed session, the S&P500 and the Nasdaq 100 edged up 0.1%, while the Russell 2000 Index tumbled 1.5%. Information technology and communication services stocks gained, but energy and consumer names declined. Intel surged 6.8% on an analyst upgrade due to strong server product pipelines. Cisco plunged 9.8%, and Walmart dropped by 8.1% after reporting earnings with downbeat guidance. Oilfield services, oil and gas exploration and production, as well as downstream energy, experienced declines.
Fixed income: Treasuries rallied in response to larger-than-expected initial and continuous jobless claims, with the latter reaching its highest level in two years. Additionally, a worse-than-expected contraction in industrial production and tumbling oil prices added fuel to the advance in Treasury prices and declines in yields. The 2-year and 10-year yields dropped by 7 basis points to 4.84% and by 10 basis points to 4.44%, respectively. The Treasury announced a $16 billion 20-year bond auction for Monday and a $15 billion 10-year TIPS for Tuesday.
China/HK Equities: The Hang Seng Index dropped by 1.4%, and the CSI300 slid 1% amid a faster decline in new and existing home prices in China in October, with investors digesting earlier news that the USD 771 billion US Federal Retirement Thrift Investment Board decided to exclude China- and Hong Kong-listed stocks. Furthermore, Presidents Xi and Biden held a 4-hour meeting but did not resolve any of the pressing economic and technological frictions. Technology hardware, healthcare, and EV stocks dragged. Meanwhile, Tencent edged up 0.7%, and JD.COM gained 2% following reporting solid Q3 results. After the Hong Kong market closed, Alibaba reported broadly in-line quarterly results, but its ADS sold off by 9.2% (5.2% below Hong Kong close) on the announced share disposal plan by Jack Ma’s family trust, scrapping the Cloud spinoff, and weak Cloud revenue growth. Hang Seng Index futures extended losses by 1.5% overnight.
FX: The US dollar steadied on Thursday despite dovish tilt in US data but the softer Treasury yields brought USDJPY 1 big figure lower to 150.40 and settled around 150.70. EURUSD rose to attempt a break of 1.09 but slumped back to 1.0850-levels. AUDUSD broke back below 0.65 on higher unemployment rate suggesting some cracks in the labor market, but 0.6460 support held up. AUDNZD moved back towards 1.0850. GBPUSD still around 1.24 while NOK underperformed amid a sharp slide in oil prices. EURNOK moved above 11.85.
Commodities: Crude oil was dumped again, falling close to 5% with Brent reaching $77 without any clear data driving it. The $75 oil has previously sparked a response from OPEC, and the cartel meets on November 26, when they will consider how to respond to weakening oil prices and concerns that a potential stumble in global growth could hold back demand. Gold surged to two-week highs of $1985+ as US jobless claims pointed towards weakening labor market further reinforcing that the rate hike cycle has ended.
Macro:
Macro events: UK Retail Sales, EZ CPI (Final), US Housing Starts
Earnings:
In the news:
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