Thursday, October 19

Daily commentary: Oct 19

This is my first attempt to provide a daily commentary. Will try my best to keep it up!

US Treasuries/Bonds
  • In US, the core CPI rose 0.2% in September, in line with consensus.
  • The Industrial production CPI, which includes energy consumption, dropped by 0.5%, which is below consensus of +0.2%.
  • The unsurprising reports leave the 10-year UST almost unchanged at 4.76% (-0.01%).

Forex

  • Yesterday there were reports on Japanese government finding ways to monitor the carry trades (which has been depressing the Yen). The Dollar/Yen shot up briefly after the news and stay at around 118.50. In my opinion, however, carry-trades are very difficult to monitor as both US dollar and Yen are freely tradable, thus I do not expect the Yen to get stronger with this single news. For short-time, expect to stay within 118.3 - 120.0 range.
  • Very quiet market for Euro. For short-term, expect tight range of 1.250 - 1.258.

US Stocks

  • DJIA rose 2.66 points to 11,992 (0.36%) and S&P rose 1.91 points to 1,365 (0.14%).
  • IBM rose $2.87 to 89.92 with its 3rd quarter earnings beating forecast. Same story for Apple, with stock rose $0.33 to 74.6.
  • Meanwhile, JP Morgan saw its stock price dropped $0.78 to 47.21 as its core business (commercial banking) delivers disappointing results. Motorola also fell 1.21 to 23.64 as its actual 3rd quarter earnings is considerably lower than estimates.
  • Healthcare/pharmaceutical stocks, e.g. Johnson & Johnson, Merck, Pfizer and Amgen continue to do well.

Japan Stocks

  • Nikkei rose 35.96 to 16688 (0.22%).
  • Stock prices of export companies e.g. Sumitomo and Matsushita Elec dropped slightly in light of the strengthening of YEN this couple of days. Meanwhile, domestic related stocks gained on expectation of higher earnings report in the coming weeks.

Hong Kong Stocks

  • Guang Da Financial (ticker: 165) rose 19% after news on capital injection (sign of imminent IPO). Be careful and don't jump into the IPO story too quickly: there are lots of China big banks in the IPO pipeline and Guang Da (being a smaller bank) may not be the favorite among institutional investors.

European Stocks

  • Together with the rest of the world, European stocks have been rising for most of the last 3 weeks.
  • In particular, EADS (manufacturer of Airbus) rose 2% to 21.7 euros as the Russian investor continues to buy the stock. However, given the uncertainty surrounding Airbus A380, expect the stock to trade at tight range of 20-25 euros.

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