US Equities: Stocks continued to advance, with the S&P 500 and the Nasdaq 100 adding 1.9% and 1.7% respectively as the 10-year yield declined further. The gains were broad-based with all 11 S&P500 sectors closed higher on Thursday, led by energy, real estate and financials. Tesla rallied 6.3%. Starbucks soared 9.5% on upbeat sales forecasts. In the extended hours, Apple dropped by 3.4% after reporting inline revenue and earnings beat but a disappointing sales outlook for the current quarter. Apple anticipated the total sales in the current quarter would be similar to the prior year's quarter which analysts had been forecasting growth of around 5%.
Fixed income: The yield curve flattened as the 2-year yield rose by 5bps to 4.99% while the 10-year yield shed 8bps to 4.66%. The longer-dated Treasuries continued to outperform as traders unwound shorts after Wednesday’s FOMC and refunding announcement ahead of the job report on Friday.
China/HK Equities: The Hang Seng Index rallied 0.8% on Thursday in response to the US Fed’s decisions overnight. The Link REIT surged 6.7%, topping the performance with the benchmark index, in anticipation of share buyback. The Hang Seng Tech Index gained 1.6%, driven by EV and technology hardware stocks. XPeng surged 7.6% after reporting strong sales growth in October. Xiaomi added 6.1% following robust smartphone sales as the Singles Day season started. In A-shares, the CSI300 slid 0.5%.
FX: The dollar weakened against most currencies as Treasury yields continued to retreat. GBPUSD rose by about 0.3% to 1.22 after the BoE left policy rates unchanged but somewhat pushed back on the market anticipation of rate cuts starting from September next year. EURUSD added 0.5% to 1.0620. USDJPY slipped 0.3% to 150.50. AUDUSD advanced 0.4% to 0.6420 while NZDUSD gained 0.7%, reaching 0.5890.
Commodities: Crude oil surged around 2.7%, with front-month WTI crude reading $82.64 and Brent crude rallying to $87.00 as traders took note of the post-FOMC decline in the dollar and bond yields.
- The Bank of England left rates unchanged at 5.25% as widely expected. Six members voted for no change while three others voted for a 25bp increase. The BoE kept the wording of “monetary policy will need to be sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term” and added that “the MPC’s latest projects indicate that monetary policy is likely to need to be restrictive for an extended period of time.” Governor Bailey said that “it is much too early to be thinking about rate cuts” and the BoE “will be watching closely to see if further rate increases are needed.” GBPUSD bounced on the news despite UK Gilt yields retreated. The 10-year UK Gilt yield finished the session 12bps lower at 4.38%.
- US initial jobless claims rose to 217k from 212k prior week versus the expectation of 210k.
- US unit labor costs decreased by 0.8% in Q3, versus the median forecast of +0.3% and sharply lower than the +3.2% in the prior quarter. Nonfarm productivity came in at 4.7% in Q3, surpassing 4.3% expected and 3.6% in Q2.
Macro events: US Nonfarm Payrolls (Oct) exp +180k, Manufacturing Payrolls exp +145k, Unemployment Rate exp 3.8%, Average Hourly Earning exp +0.3% M/M & +4.0% Y/Y; US ISM Services Index (Oct) exp 53.0; Eurozone Industrial Production (Sep) exp 0.0% M/M & 0.0% Y/Y; Eurozone Unemployment Rate (Sep) exp 7.4%.
Japan is closed for holiday
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