Another wobbly session for US stocks as the S&P 500 had continued to decline for the second consecutive session by -0.3% and the Russell 2000 that consists of smaller capitalization stocks with a majority of their revenue streams derive from US, tumbled by -0.9%. One bright spot was the Nasdaq 100 as it managed to rebound from Monday’s loss with a gain of +0.8% supported by the “mega Big Tech” firms (Microsoft, Apple, Amazon, Facebook & Google/Alphabet) ahead of their earnings releases.
However, market breadth has been weak where the number of decliners surpassed advancers by a ratio of almost 2 to 1 in the NYSE and 1.5 in the Nasdaq Composite. Value oriented stocks had continued to see underperformance where the S&P sectors; Industrials (-2.2%), Financials (-1.9%) and Energy (-1.4%) tumbled. Hence, it seemed that a “Joe Biden plus a blue sweep” victory had been almost fully priced into the US stock market.
US earnings; Microsoft reported stellar results after the US session close for the September quarter supported by strong demand for its cloud computing products. Earnings and revenue surpassed expectation; earnings per share at US$1.82 (consensus US$1.54), revenue at US$37.15 billion (consensus US$35.72 billion). However, the share price of Microsoft tumbled by -1.7% to US$209.70 in the after-hours trading session after a gain of +1.5% (US$213.25) recorded at the close of yesterday US session. Thus, created a negative feedback loop into the Nasdaq 100 futures as it decline by -0.5% in today’s Asia session to trade at 11532 at this time of the writing.
Over to the foreign exchange market, the US dollar movement was muted overall against the major currencies as the US Dollar Index remained almost unchanged at 93.09 (+0.02). One significant development to take note will be the JPY, a safe haven proxy where the USD/JPY had tumbled by -0.4%, the most in three days (indicating JPY strength) and it is now testing a key medium-term range support at 104.40/104.00 for the third time and clear break below it may see a further slide towards the March 2020 swing low area of 102.40/101.18. Hence, the current movement of the key US benchmark stock indices and USD/JPY may indicate an impending big scale risk-off event in the run-up to November 03 US presidential election.
Over to Asia, Ant Group had reaped in $217.3 billion in margin from banks and brokers after its IPO offering kick-started yesterday that will be equivalent to 64 times over subscription in the public offering tranche according to a media report cited by aastocks.com.
Key Asian benchmark stock indices had started today’s session with losses across the board; Japan’s Nikkei 225 (-0.38%), South Korea’s KOSPI 200 (-0.34%), Hong Kong’s Hang Seng Index (-0.86%) & Hang Seng Technology Index (-0.23%), China’s CSI 300 (-0.20%). In addition Singapore’s Straits Times Index (-0.40%) while Australia’s ASX 200 outperformed (+0.07%).