Friday, January 3, 2020

Global stocks surge on first day of trading; US economy continues to look robust

Tags
  • China
  • Dollar
  • Gold
  • Yen
  • Stocks

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Market Recap: Global stocks surge on first day of trading; US economy continues to look robust

US equities started 2020 surging to record highs as trade optimism and China's economic stimulus fueled investor sentiment. The PBoC cut the reserve requirement for banks in China for the eighth time since 2018 on Wednesday and signalled that it will continue to cut borrowing costs for businesses in 2020. Higher volumes in the US markets and possibly the reversal of window dressing strategies at funds with holdings in the US market likely also contributed to the spike in equities.

Indexes Change (%) Net Change Closing Price
Dow Jones 1.16% 330.36 28,868.80
S&P500 0.84% 27.07 3,257.85
Nasdaq 1.33% 119.58 9,092.19
*Source: Bloomberg

The greenback recovered on Wednesday after the number of unemployment benefit claims in the last week inched lower. Initial jobless claims fell by 2,000 to 222,000 for the week ended December 28th. But the four-week moving average of initial claims rose by 4,750 to 233,250, the highest since January 2018. The dollar still managed to gain against almost every major currency aside from the yen and loonie.

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Demand for safe haven assets rose as investors hedged their risk against the record highs in the stock market. Gold, silver and yen all gained on Wednesday. US Treasuries gained as well, pulling yields lower on the day. Benchmark 10-year yields was 4bps lower at 1.88% on Wednesday.

Safe Haven Assets Change (%) Net Change Closing Price
Gold 0.78% 11.84 1,529.13
Silver 0.95% 0.17 17.79
JPY 0.17% 0.19 108.57
*Source: Bloomberg
US Treasury yields Change (bps) Yield (%)
2-Year 0 1.57%
10-Year -4 1.88%
30-Year -6 2.33%
*Source: Bloomberg

Meanwhile in Asia, stocks look set to track US gains. The KOSPI Index started Friday's trading session 0.80% higher, while the ASX200 was flat on market open. But both indices gained later in the morning. Hang Seng Futures gained overnight as well, rising 0.76% as of 3am (GMT +8).

Asia Change (%) Net Change Last Price As of (GMT +8)
KOSPI Index 1.00% 21.84 2,197.01 8:30:20 AM
ASX200 Index 1.20% 80.62 6,771.20 8:30:06 AM
Hang Seng Futures 0.76% 216.00 28,822.00 2:59:59 AM
*Source: Bloomberg

The euro and greenback will be affected by macro releases today and tomorrow. Germany’s labour market and inflation data for December will be released today at 4.55pm and 9pm (GMT +8) respectively. Also, traders will be looking out for the ISM Manufacturing PMI report at 11pm today as well as the FOMC December monetary policy meeting minutes set for tomorrow at 3am (GMT+ 8).