Last Friday, the US stock market ended the session on a mix picture, where the S&P 500 gave up its early session gains of almost 0.9% to end the day almost unchanged (+0.01%), while the Nasdaq 100 underperformed with a loss of -0.4% due to a last hour selling dragged down by the two large cap tech stocks; Apple (-1.40%) and Amazon (-2.00%).
The reason of the last hour sell-off was likely due to flows from options expiration rather than economic or firm specific factors. Overall, the S&P 500 and Nasdaq 100 ended the week on a positive footing, with gains of 0.2% and 1.1% respectively, with industrial stocks taking the lead with a weekly gain of +1.1%, as seen in the S&P industrials sector, while real estate (-2.3%) and energy (-2.1%) underperformed.
The US dollar was steady against the major currencies, and the US Dollar Index ended the week with a gain of +0.7% that almost erased off the prior week’s loss. The GBP/USD was almost unchanged at the end of last Friday US session, and traded above the 1.2835 near-term support. The ongoing Brexit talks were stalled again as UK PM Boris Johnson said that there was no point in continuing talks and to prepare for a “no-deal” exit when transitional arrangements with EU will end on 31 December. On a more conciliatory note, Michael Gove, one of UK senior ministers, commented on Sunday that the door for a deal was still “open” if the EU was willing to compromise.
US House Speaker Nancy Pelosi commented over the weekend that a pre-election fiscal stimulus deal remained possible but set a deadline on Tuesday 20 October for more progress with the White House, as negotiation talks with relevant stakeholders continue today.
In today’ Asian session, optimism seems to be ignited where the US stock indices futures; S&P 500 and Nasdaq 100 notched up gains of +0.6% and +0.9% respectively at this time of the writing. Also, according to IFR cited unnamed sources, China’s securities regulator, CSRC has given approval for Alibaba’s ANT Group mega IPO listing in Hong Kong, clearing the regulatory handle ahead of key event risk, the November US presidential election.
China’s Q3 GDP came in at 4.9% year-on-year, slightly below expectation of 5.2% but it’s the second consecutive quarter of positive growth above Q2 GDP of 3.2% year-on-year after -6.7% recorded in Q1, its worst economic performance in four decades.
In addition, China’s retail sales for September surpassed expectation of 1.8% year-on-year, came in at 3.3% year-on-year above 0.5% recorded in August, its second consecutive month of positive growth that indicate a revival in consumer confidence. Industrial production for China increased by 6.9% year-on-year in September (5.8% consensus), the most since December 2019.
Asian’s stock markets are basking in a risk-on mood from these positive developments; Japan’s Nikkei 225 rallied by +1.2% (23,685), Hong Kong’s Hang Seng Index +0.9% (24,611), China’s CSI 300 +0.9% (4,833) with yuan strength seen where the USD/CNH (offshore yuan) is retesting 6.68 major support in place since February 2019 at this time of the writing.