Market Brief: Bloom Comes Off the Risk Rose Amidst Middle East Bombing
Matt Weller, CFA, CMT January 3, 2020 4:15 PM
See a summary of the top market themes and trends from today's US trading session!
View our guide on how to interpret the FX Dashboard.
- Markets assumed a clear risk-off posture following last night’s US missile strike in the Middle East, with safe haven assets in particular demand.
- The minutes from the December Federal Reserve meeting were mostly uninspiring, with officials suggesting that rates were likely to remain steady unless there was a material change in the underlying economic situation.
- US data: ISM Manufacturing PMI (Dec) printed at 47.2 vs. 49.0 eyed, the lowest reading since 2009. The Employment subcomponent fell to just 45.1, signaling a relatively sharp contraction in hiring in the sector. Separately, Construction Spending (Nov) rose 0.6% m/m, more than the 0.4% reading eyed.
- FX: The Japanese yen was the strongest major currency today, followed by the US dollar. The British pound was by far the weakest, falling by more than 1% against the day’s leading currencies.
- Commodities: Oil rallied more than 3% on the day, boosted by the turmoil in the Middle East and a surprise drawdown in inventories. Gold tacked on about 1.5% in a safe haven bid.
- US indices closed lower on the day, spooked by tensions in the Middle East.
- REITs (XLRE) were the strongest sector on the day, gaining more than 0.5%. Materials (XLB) was the weakest, falling by more than -1%.
- Stocks on the move:
- Aerospace and Defense names were the big movers, led by Northrop Grumman (NOC, +5%) and Lockheed Martin (LMT, +4%)
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.