Chief China Strategist
Summary: U.S. equities retreated after a two-week surge, despite positive economic indicators and lower Treasury yields. The S&P 500 and Nasdaq 100 fell by 1.5% each, and Tesla plummeted by 3.9%. Treasury yields dropped, with the 10-year falling 8 bps to 3.85%, reaching July levels. The 2-year yield also decreased by 11 bps to 4.33%. This was prompted by a decline in UK Gilt yields due to an unexpected 0.2% month-on-month contraction in the U.K. CPI.
The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.
US Equities: Stocks finally retreated and consolidated after a two-week streak of gains as investors booked profits, despite a large fall in Treasury yields, stronger consumer confidence, and housing data. The S&P 500 and Nasdaq 100 each declined by 1.5% to 4,698 and 16,554, respectively. Tesla plunged 3.9% after Bloomberg reported that the EV maker is not giving employee merit-based stock grants this year. FedEx plummeted 12% after reducing revenue guidance. General Mills declined 3.6% after the food company reported revenue for the last quarter, missing estimates, and trimmed full-year sales forecasts. Bucking the broad market declines, Alphabet gained 1.2% on a report that Google is planning to revamp its advertising-sales unit. In after-hours trading, Micron Technology surged around 5% after it reported earnings and revenues beating analyst estimates.
Fixed income: Treasuries rallied, with yields falling across the yield curve. The 10-year yield, down 8bps to 3.85%, reached levels last seen in July. Meanwhile, the 2-year yield dropped by 11bps to 4.33%. This move was triggered by the 12bp drop in the 10-year UK Gilt yields following an unexpected 0.2% month-on-month contraction in the U.K. CPI.
China/HK Equities: The Hang Seng Index bounced 0.7%, led by Macao casino stocks in anticipation of robust gaming revenues during the holiday season. China Internet names also rallied. However, the CSI300 slid 1.1%, dragged down by media, computing, and appliances. Investors' sentiments remain fragile.
FX: Despite the sharp fall in Treasury yields, USDJPY fell only moderately by 0.2% to 143.57. The Pound Sterling plunged on softer CPI data, with GBPUSD declining 0.7% to 1.2639. AUDUSD weakened to as low as 0.6724, trading at 0.6744 as of writing.
Commodities: Crude oil extended its rally, with Brent crude rising 0.6% to $79.70 and the WTI crude added 0.4% to $74.22. Iron ore gained 1.2% to $133.9.
Macro:
Macro events: U.S. jobless claims, U.S. GDP (Q3, 3rd estimate), Philadelphia Fed business outlook (Dec), U.S. 5-year TIPS auction, France business confidence (Dec), Hong Kong CPI (Nov).
Earnings: Nike, Cintas, Carnival
In the news:
For all macro, earnings, and dividend events check Saxo’s calendar.
For a global look at markets – go to Inspiration.
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