US equity index futures fall back slightly after a lack of statements following the Trump-Xi meeting, following a session where the S&P 500 (6,890) was flat. The Nasdaq 100 (+0.4% to 26,119) edged higher, while both Dow 30 (-0.2% to 47,632) and Russell 2000 (-0.9% to 2,484) suffered losses after the Federal Reserve cuts rates as expected but had a couple hawkish twists (see FX/Central Banks below), and once again most sectors finishing in the red while tech was on top.
Treasury yields finish higher across the curve and so too in real terms with the 10-Year back above 4% following the FOMC event, and market pricing (CME’s FedWatch) of a 25bp rate cut in December reduced notably from nearly fully pricing it in prior, and now an insignificant minority on a January rate reduction.
– Shares of Nvidia (NASDAQ:NVDA) climb 3% reaching a fresh record high and taking its market cap beyond $5tn as the ‘AI engine’ takes full advantage of the boom
– Meme stock movers: Beyond Meat (NASDAQ:BYND) (-6.6%), Kohl’s (NYSE:KSS) (-3%), GoPro (NASDAQ:GPRO) (-5.7%), Krispy Kreme (NASDAQ:DNUT) (-6.2%), Opendoor (-4%), Nokia (-4.3%)
– Crypto stocks track cryptocurrencies to close lower: Coinbase (-1.9%), MicroStrategy (NASDAQ:MSTR) (-3.3%), Gemini Space Station (-3.9%), Bullish (-2.7%)
– Earnings:
– ‘Hawkish cut’ sees gold prices end a bit lower as the dollar strengthened on the FX front and Treasury yields rose though silver avoided a red finish again hovering above $47 and taking the gold/silver ratio below 83, with a lack of an optimistic conclusion on the US-China trade front giving the yellow metal a slight bump
– Oil prices (WTI) oscillate around $60; EIA’s weekly energy inventory estimates show drawdowns for oil (-6.9m barrels), gasoline (-5.9m) and distillate (-3.4m)
– Bitcoin struggles in the face of the Fed’s ‘hawkish cut’ and falls out of its short-term bull channel with larger percentage losses for Ethereum yesterday getting below $4K; notable outperformer on the altcoin front $TRUMP jumping over 12% before falling back 3% this morning
– US Dollar Index strengthens following the FOMC event where putting a December rate cut in doubt a plus for the greenback though still hasn’t managed to get out of the 98s just yet
– Federal Open Market Committee cuts rates by 0.25% to 3.75-4% as expected with Miran opting for a larger 50bp and Schmid preferring no change; balance sheet runoff to end December 1; statement tweaked to reflect increase in inflation; Chairman Powell on the “strongly differing views about how to proceed in December” as a “growing chorus” among Fed officials to “at least wait a cycle” before reducing again, and in turn a further rate reduction “not a foregone conclusion. Far from it.”
– Bank of Canada cuts rates by 25bp to 2.25% as expected; says current policy rate is “about the right level”
– Bank of Japan holds on rates at 0.5% as expected; Takata and Tamura dissent favoring a 25bp increase
– Indices: Shifts in the Nasdaq (from the middle to a slight buy 53%) as some fresh longs opt to go with the trend, while a price pullback for both Dow and Russell sees long bias increase; elsewhere the big pullback in the ASX pushes buy sentiment further into extreme long territory (86% from 79% yesterday)
– Commodities: Back in extreme buy territory in gold (78% from 75% yesterday) as the pullback in price even if small brings some range-trading longs into the mix, holds in silver (at extreme buy 84%) and WTI (83%)
– US weekly mortgage applications (MBA) climb 7.1%; pending home sales in September flat m/m but previous revised higher to 4.2%
– US FOMC members speaking
– European Central Bank’s policy decision (5:15pm Dubai time; hold on rates expected), EZ preliminary GDP and unemployment rate (2pm), German preliminary CPI and labor data
– Earnings from Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Eli Lilly (NYSE:LLY), Mastercard, Merck, Shell, TotalEnergies, Comcast, Coinbase, MicroStrategy, and more
– Any details from the meeting between U.S. President Trump and Chinese President Xi in South Korea
