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Falling rates fuels Nasdaq’s rebound, US dollar loses ground, job data is on watch

Nasdaq

Wall Street finished mixed on Thursday ahead of the key US job data that is due for release later Friday. While Dow and S&P 500 closed lower, the tech-heavy index, Nasdaq managed to climb higher due to a further slump in the US bond yields, which also sent the US dollar index falling to its lowest level since early August, further boosting the other major currencies and commodity prices, with gold futures surging $56 per ounce to the highest level since early July. Both US 10-year and 2-year bond yields fell to a two-month low of just above 3.5% and 4.2%, respectively. But the two-benchmark yield stays deeply inverted, flagging the recession alert.

On the economic front, the newly released US Core PCE data for October also showed that inflationary pressure came to lighter, with a 5% year-over-year growth, down from 5.2% the prior month, while the ISM manufacturing PMI dropped to the lowest level of 49.0 since May 2020. 

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  • Tech shares led Nasdaq to gain for the second straight trading day, closing above its key resistance of 11,500.  3 out of the 11 sectors in the S&P 500 finished higher, with Technology, Communication Services and Healthcare leading gains, up 0.07%, 0.29%, and 0.24% respectively. The big-cap tech companies were mixed, among which Meta Platforms and Netflix outperformed, up 2% and 3.7%, respectively. Major oil producers, including Occidental, and Exxon Mobil finished lower, dragging on Energy stocks down 0.4% for the day.
  • Salesforce shares slumped 8% after the company announced its co-CEO Bret Taylor’s departure. The software giant beat earnings expectations in the third quarter, with EPS at $1.40 versus $1.21 expected, and revenue at $7.84 billion versus $S7.82 billion estimated. The revenue is expected to be between $7.9 billion to $8.03 billion for the fourth quarter.
  • Gold futures soared $57 per ounce or a 3.3% jump due to a slump in the US dollar and bond yields. The precious metal finished above the 200-day moving average, marking another bullish breakout of the key resistance of 1,800, heading to the next potential long target of 1,840.
  • Crude oil rose for the fourth straight trading day but run off session highs ahead of the OPEC meeting. While softened USD and China’s reopening optimism continued to offer the oil market upside strength, OPEC’s decision on the future output may steer the price movements going forward. Another possible bullish factor is that the EU’s full termination of Russia’s oil export will kick off on 5 Dec, but this may have been digested.
  • USD/JPY tumbled 2%, to the lowest level seen in early August due to the sharp decline in the US dollar and the US bond yields. The pair fell off the key resistance of 137, heading off the further support of 133 after BOJ board member Naoki Tamura said to assess the monetary policy and inflation target.
  • Asian equity markets are set to open mixed. ASX futures were down 0.20%, Nikkei 225 futures fell 0.85% and Hang Seng Index futures rose 0.38%.

 

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