Market Update – November 16 – Stocks rally fizzles out

Profit-taking on overbought conditions was the general rational after bond bulls overzealously brought forward Fed rate cuts to the spring, and aggressively priced in 50 bps in easing by mid-year. The mixed signals from the data on retail sales, PPI, and the Empire State did not provide much direction. Treasuries gave back about half of Tuesday’s CPI-inspired rally as yields climbed about 7 bps across the curve.

Meanwhile, President Biden and Chinese leader Xi Jinping adopted a less contentious tone at their summit, though deep US-China disagreements remain.

• Japanese exports grew for a second consecutive month in October but at a significantly slower pace, primarily due to decreased shipments of chips and steel to China.
• Chinese data showed prolonged weakness in the property sector and dented some of the recent optimism about a recovery in the world’s second-largest economy. Chinese home prices fell the most in 8 years in October.
• USDindex maintained its position above 104 on Thursday, showing stability after recent volatility.
• AUDUSD and NZDUSD: The risk-sensitive Australian and New Zealand dollars dropped to 0.6474 and 0.5978 respectively, in response to declining regional equities and Australian rising jobless rate even as employment numbers improved in October.
• Stocks:
  • Asian stocks declined, interrupting the week’s significant gains, following Chinese data. JPN225 ended 0.28% lower at 33,424.41, breaking a 3-day winning streak, influenced by profit-taking and a rebound in US Treasury yields.
  • US stocks closed slightly higher, with the US30 rising by 0.47%, the US500 gaining 0.16%, and the US100 ending flat.
• #Target experienced a more than 15% increase following better-than-expected Q3 results, while #Microsoft introduced its first AI chip, Maia 100, and a cloud computing chip.
• Energy: Oil extended declines after a government report showed swelling US crude inventories. USOIL dipped 0.9% to $75.97 a barrel, and UKOIL crude fell to $80.44 per barrel.
• Metals: XAUUSD rose slightly, with spot gold traded at $1967 per ounce.
• Cryptos: BTCUSD recovered a 2-day drift and returned above 37.3K, possibly attributed to profit-taking by sellers anticipating another SEC spot ETF delay; lower inflation and bond yields expected to support further crypto prices.

Interesting Mover: NZDUSD (-0.74%) holds ground above 4-months descending channel. Key support at 0.5940 and Key Resistance at 0.6000.

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Andria Pichidi

Market Analyst

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