Another day, another dose of fiscal stimulus optimism from US House Speaker Nancy Pelosi as she commented that a stimulus deal was “just about there” having been in talks with Treasury Secretary Steve Mnuchin for the entire week.

The markets reacted positively as the S&P 500 reversed its earlier loss of -0.6% to end the US session with a gain of +0.5%, while the Nasdaq 100 closed almost unchanged.

Interestingly, the Russell 2000 outperformed (+1.7%) supported by a rising US Treasury 10-year yield for the sixth consecutive session to end at 0.86%, inching towards the June 2020 high of 0.954%. Sectors outperformers; value and cyclical oriented stocks such as Energy (+4.2%) and Financials (+1.9%) also benefited from the rising yield. In contrast, stocks that do not benefit from a rising yield/interest rate environment underperformed; Real Estate (-0.8%) and Information Technology (-0.5%).

Over to US Q3 earnings season, Intel tumbled -9.4% to US$48.85 in the after-trading session after a disappointing earnings from its data business unit despite meeting expectations on revenue (US$18.26 billion versus US$18.3 billon consensus) and adjusted earnings per share at US$1.11. Intel’s Data Centre Group’s “Enterprise & Government” business unit declined by -47% year-on-year, following two quarters of more than 30% growth.

In the foreign exchange market, the US dollar had almost recovered from the prior session loss against the major currencies; the US Dollar Index gained by +0.4% after the EUR/USD tested and retreated by -1.82% from the 1.1860 long-term secular descending resistance in place since April 2008 high.

As the last US presidential election debate went underway at this time of the writing, there was no major impact on the US stock indices futures; S&P 500 and Nasdaq 100 almost unchanged at 3444 and 11634 respectively.

Over to Asia, Hong Kong Connect, a tie-up between the stock exchanges of Hong Kong and China had opened China’s US$157 billion market for exchange-traded funds (ETF) to international investors from today. At a start, four “feeder” ETFs that track the Hang Seng Enterprises Index, S&P New China Sectors Index, CSI 300 Index and a basket of China’s 5G firms will start trading on Shenzhen and Hong Kong exchanges.  

Events to watch

Singapore inflation data for September; core CPI is expecting to come in at -0.2% year-on-year above August’s figure of -0.3%.

UK retail sales data for September; retail sales is expecting to come in at 0.4% month-on-month, a dip from 0.8% recorded in August.

Germany preliminary manufacturing & services PMI for October; consensus is set at 55.1 for manufacturing activities below 56.4 recorded in September while consensus for growth in the services sector is set for a decline at 49.2 below 50.6 recorded in September. 

Source: CMC Markets


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