Stocks slumped and bonds rallied as intensifying concern over the impact of the deadly coronavirus rattled markets around the world. The S&P 500 Index slid the most in almost four months, with tech and energy companies leading losses. The Philadelphia Semiconductor Index tumbled about 3%. China-exposed U.S. names Wynn Resorts Ltd. and Nvidia Corp. plunged at least 4% and airlines sank. European shares fell as much as 2.4%. Chinese markets are said to resume trading after the Lunar New Year holiday on Feb. 3, but assets that track the country's largest stocks took a nosedive. The iShares MSCI China ETF and Invesco China Technology ETF dropped at least 4%. China-based Alibaba Group Holding Ltd. and Yum China Holding Inc. also slumped. The offshore yuan slid toward the lowest this year. The flight to safety, which comes ahead of this week's Federal Reserve meeting, saw volumes in Treasury futures jump to double their regular levels in Asia. The yield on 10-year U.S. bonds dropped to the lowest since October. Similar-maturity German securities extended their advance to the longest in almost six months. The Swiss franc, the Japanese yen and gold paced gains in haven assets. Oil slipped to a more than three-month low.
Steve Brown, Senior Corporate Trader | Stevebrown@vbce.ca
The CAD was relatively unphased by falling oil prices and risk aversion from the coronavirus reports early in the week. USDCAD climbed from 1.3042 up to 1.3094 before falling to 1.3036 ahead of Wednesday's Bank of Canada interest rate decision. The surprisingly dovish tone within the Bank of Canada policy statement forced the CAD lower across the board. USDCAD climbed to a 1 month high of 1.3172 before a broad recovery Thursday and Friday led the pairing back down to 1.3118. The BOC press conference was less dovish than the BOC statement implied. Also, Canadian retail sales data was not as bad as initially feared and showed a marked improvement from October. USDCAD finished the week near 1.3140/50 as equity markets and oil prices soured during Friday's North American session. Overall, the CAD, EUR, and AUD were the worst performing currencies this week. The EURO actually gained to a 3 week high just after the European Central Bank interest rate announcement on Thursday only to fall back towards 3 year lows. The deposit rate in the Eurozone remains at -0.50% and there was no indication on a move back towards positive interest rates. The coronavirus is threatening to dent China's economic growth this quarter and the AUD has suffered due to its close economic ties. The AUD initially gained on a strong employment report but quickly reversed course finishing the week as the worst performing currency. Risk aversion flows most evident during Friday's NA session led the JPY higher towards a 1 month high. The USD also broadly gained. The USD index (DXY) climbed to a 2 month high after having started 2020 near 6 month lows.
Yesterday, USDCAD climbed from 1.3142 up to 1.3172 before falling to 1.3122 and held near session lows during the NA afternoon session. The move effectively retraced nearly 50% of Wednesday's post Bank of Canada move higher. The CAD was the worst performing currency Wednesday but was the best performing currency on Thursday. The EURO was the worst preforming currency losing 1 cent to the CAD on dovish European Central Bank comments. Chairman Lagarde did not offer up any hint of a shift to positive interest rates. The ECB deposit rate was kept unchanged at -0.5%. The CAD was the best performing currency overnight along with the NZD as equity markets shrugged off coronavirus concerns sending USDCAD from 1.3143 down to 1.3121. Canadian retail sales data showed improvement but CAD gains were marginal. Over the past few hours, oil prices have reversed course from gains to losses as have equity markets. Risk aversion flows have buoyed the JPY and USD with both pairings near session highs. USDCAD has climbed from session lows @ 1.3118 up to session highs @ 1.3150 accordingly.
Stocks from New York to London to Shanghai slumped Thursday, as China grappled with a worsening viral outbreak that led investors to reassess the potential economic fallout world-wide. A number of Cities in China put in SEVERE travel restrictions. Markets are now preparing for potential worse news ahead.
U.S. stocks gained on speculation the repository illness that emerged from China won't be as bad as initially feared and as better than expected corporate earnings lifted optimism. The dollar edged lower and oil fell. Meanwhile Canadian markets have their eye on The Bank of Canada release today.
All three of the main U.S. gauges slid in early trading, with industrial shares among the worst performers after declines in Asia and Europe triggered by reports that the mystery respiratory virus originating in China was spreading faster than expected and over greater distances.
Major currencies are continuing to trade in a rather subdued manner today and may yet carry on later in North American trading, as we observe a long weekend in the US. Liquidity conditions are expected to stay thin and with Wall Street not offering any direction for investors to latch onto, trading sentiment remains rather indecisive to start the week. The pound has been the notable mover so far in the European morning but it isn't too big a move as the currency stays pressured ahead of the BOE meeting next week. Meanwhile, European stocks are more mixed with some slight weakness but are keeping near flat levels overall.
Yesterday, USDCAD held an uneventful 1.3030 – 1.3055 range. The pairing has been non-trending this week within a very narrow 1.3030 – 1.3080 range after having traded between 1.2958 (near 15 month lows) and 1.3105 last week. The EUR, GBP, and AUD are marginally lower today while the USD and JPY are marginally higher. U.S. second tier economic data was generally weaker than expected although there was very little reaction in the markets. USDCAD tested weekly support overnight before climbing to 1.3060 this morning. After the data releases the rate dropped to 1.3040 before climbing to 1.3068. The pairing has since moved lower to 1.3055.
The record -setting rally in U.S. equities accelerated in the wake of Wednesday's China trade deal and signs consumer demand remains strong. Treasuries dropped, while the currency markets remain "Dead as doornails", with little movement again.
Stocks were mostly unchanged as investors eyed the start of U.S. earnings season and officials prepared to sign the China Trade deal in Washington. Treasuries climbed after a guage of underlying inflation rose less than forcast. Currency trades remain stuck in a narrow range.
U.S. equities rose, led by shares of technology companies, in a week expected to be dominated by the start of earnings season and the signing of a partial China trade deal. The dollar pared gains after the U.S. was said to plan to lift its designation of China as a currency manipulator. Earnings from some of the biggest U.S. banks kick off the season Tuesday, amid forecasts that overall corporate profits will show the smallest growth in 3 years. The pound led declines among Group-of-10 currencies after another Bank of England official pointed to a potential vote for a U.K. interest-rate cut this month and data showed the economy unexpectedly shrank. Germany's benchmark bund yield headed for least negative closing level since May. The offshore yuan strengthened past 6.9 per dollar for the first time since July. The dollar edged higher and Treasuries fell across the curve as the completion of the first trade deal nears; President Donald Trump has said the U.S. and China will sign the accord on Wednesday. The U.S. in August first formally labeled China a currency-manipulator, a move that further escalated the trade war with Beijing after the country's central bank allowed the yuan to fall in retaliation to new U.S. tariffs. Elsewhere, equities advanced in all major Asian markets except Japan, where there's a holiday, and Australia. Oil fluctuated after last week posting its steepest loss since July.
U.S. stocks rose and Treasuries fell as investor appetite for risk returned after America and Iran stepped back from the brink of War. The S&P headed for another record with Tech leading the advance. Oil and gold continued their decline while the Japanese Yen dropped to a two week low versus the dollar.
U.S. stocks fell as investors remained wary of an escalation in tensions with Iran. The dollar gained, while oil continued its retreat from multimonth highs. The S&P 500 headed for its second drop in three sessions, with investors cautious after Iran threatened a military response to a U.S. airstrike that killed a top general four days ago. The Cboe Volatility Index rose above 14 as geopolitics dominated sentiment.
Stocks pared losses as investors assessed the potential economic impact of rising tensions in the Middle East. The S&P 500 erased nearly all of its earlier decline that reached more than 0.6% as traders weighed how the conflict between the U.S. and Iran would affect global markets. The Nasdaq composite turned higher, while bank shares led losses on benchmarks as the 10-year Treasury yield held below 1.80%. The risk-off rally that started Friday lost some momentum Monday as gold retreated from the highest in more than six years and the yen fell from a three-month high versus the dollar. Oil pared its advance, which touched the highest since April, to around $63 a barrel in New York. The sudden escalation of tension in the Middle East continues to damp the enthusiasm that sent the S&P 500 Index to a record on its first trading day of the year. Investors looking ahead to the planned signing of a U.S.-China phase-one trade deal later this month were rattled by the American strike on Iranian General Qassem Soleimani, which served as a reminder that markets remain vulnerable to geopolitics.
Stocks started the year on the front foot, building on strong gains for many asset classes in 2019 as investors cheered the latest policy move by China's central bank to support its economy. The dollar and Treasuries strengthened. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite indexes all climbed to record highs in the wake of one of the best years for American stocks in the past decade, and the Stoxx Europe 600 Index advanced for the first session in three as every sector traded in the green. Gauges in Hong Kong and Shanghai jumped more than 1% after the People's Bank of China said it will increase the supply of cheap funding to banks, in line with market expectations. The yuan showed little reaction.
Yesterday, USDCAD declined from 1.3161 down to 1.3105 with bounces limited to 1.3127 while Canadian markets were sidelined for Boxing Day. The USD is broadly weaker again today with the USD index falling towards a 5 month low. USDCAD has fallen to 1.3076 with bounces limited to 1.3097 this morning. The pairing is not far off the Oct low of 1.3045 and the July / 2019 low of 1.3016. Other currencies are trading near multi-month highs against the USD as well – EURUSD @ 4 month high, GBPUSD near 8 month highs, and AUDUSD near 5 month highs.
U.S. stocks fluctuated near a record and Treasuries slipped in thin Christmas Eve trading. Oil and gold rose as "not a creature was stirring not even………a little volitility". Markets look like they have packed it in for the day with little movement ahead.
U.S. stocks edged toward fresh record highs in light trading as investors chased gains that have added more than $5 trillion to valuations this year. Treasuries advanced. The S&P 500 rose for the 8th time in 9 sessions on its way to another all-time closing high after China said it cut tariffs on a wide range of goods. The holiday week took a toll on the benchmark's volume, which was more than 20% below its 100-day average. The Dow Jones Industrial Average paced indexes and Ten-year Treasury yields fell to around 1.90% after durable goods orders unexpectedly dropped for the third time in the last 4 readings. The dollar was little changed, while the pound extended a decline after seeing its worst week in more than two years amid Brexit fears. Major asset classes are collectively on track for the best returns in a decade in 2019 after central banks around the world eased monetary policy. Trade tensions have also eased ahead of the year-end, calming investors' nerves. The signing of the first-phase of the U.S.-China trade deal is set for January. Meanwhile, Chinese shares dropped after a state-backed fund said it would pare its stakes in some tech companies.
Yesterday, USDCAD held near 7 week lows within a 1.3110 – 1.3130 range. The pairing moved up to 1.3144 overnight before climbing to 1.3180 this morning after the release of the Canadian October retail sales data. The data missed estimates and was the lowest reading in 11 months. The rally higher stalled just below the weekly high of 1.3186 tested Monday and Tuesday. USDCAD has since fallen back to 1.3153 with subsequent rallies also stalling at 1.3175/80.
U.S. stocks edged toward fresh records as investors chased gains that have added more than $5 trillion to valuations this year. Government bonds fell around the world as a string of central banks kept their interest rates steady while one raised its benchmark.