For those of you just hitting the desk for the Asia-Pac session, here is a quick look at where we traded into the US close.
Equities:
It wasn’t a great day for risk sentiment yesterday. The S&P 500 closed -0.57% at 6,412, the Nasdaq 100 -1.39% at 23,385, while the Dow was basically flat (+0.02%) and small caps (RUT) fell 0.77%. Defensives like staples, utilities and healthcare outperformed as Tech and Communication Services weighed, with sentiment dented by a widely-cited MIT paper arguing most firms aren’t seeing returns from gen-AI investments. The news that Nvidia reportedly prepped a new China-compliant AI chip didn’t help with the stock leading the mag-7 to the downside (-3.50%).
Forex:
In FX it was a clear risk-off session with the safe haven currencies trading like the USD, CHF and JPY leading the majors to the upside, with the JPY the outperformer as US yields drifted lower as well. Conversely, with the risk-off tone, it wasn’t too surprising to see the classic high beta currencies like the AUD, NZD and CAD underperforming the rest.
Commodities:
Crude slipped with the broader risk tone: WTI (Oct) settled USD 0.93 lower at 61.77/bbl and Brent (Oct) USD 0.81 lower at 65.79/bbl, trading 61.65–62.68 and 65.61–66.58, respectively. Traders were unmoved by the private crude inventory data, while ongoing chatter about potential Russia-Ukraine talks (possibly a Budapest summit) failed to deliver any market-moving reactions. Gold and silver took a beating with the stronger USD (also worth noting that both metals has a high beta to equities on big red days).
Bonds:
It was a solid session for treasuries, which caught a bid across the European and US sessions. The upside in bonds forced yields lower, US10Y settling close to 4.30%, and downside seen in both DE10Y and GB10Y as well. All eyes for yields remain on Jackson Hole and any potential surprises we get from Powell.
This article was written by Arno V Venter at investinglive.com.