US Market Wrap 25 September 2018

Posted by Billy Macris on 25-Sep-2018 09:24:57

A fresh week began for US equities on Monday after Friday’s quadruple witching which is where on the third week of every quarter market index futures, market index options, stock options and stock futures expire – resulting in some cases increased volatility. Markets also digested the new S&P 500 sector reshuffling which saw the telecommunications sector revamped into the communication services.

Above all the Dow fell away 181 points down 0.68%, the S&P 500 dropped 10.30 points or 0.35% whilst the Nasdaq rose a mild 6.29 points or 0.08% after gains in Netflix +2.33%, Amazon +1.01% and Facebook +1.52% The decline in markets was a result of increased political turmoil ahead of the midterm election. Of the drama, on Monday there were reports that Deputy Attorney General Rosenstein is leaving/being fired –a statement released from the White House later said that President Trump would meet with the AG amid the conflicting reports. Stocks also came under pressure from a report outlining that China had cancelled talks with the US after both countries imposed billions of dollars worth of tariffs. Boeing shares fell 1.14% and Caterpillar Inc. shares fell 1.52%.

From the Dow stocks, Disney shares rose 2.15% after being included in the new communication services sector reshuffle, Exxon shares rose 1.68% along with Chevron rising 1.23% and Apple shares rose 1.44%. Energy was the best performing sector rising 1.47% after oil prices spiked. Brent crude breached $81 a barrel or 3.2% after OPEC leaders indicated they wouldn’t be immediately boosting output and after President Trump tried to push for lower prices through his twitter account.  In a separate note, JP Morgan came out and stated in its most recent market outlook that they believe a spike to $90 a barrel is likely due to the US Sanctions on Iranian oil exports.

Interest rate sensitive sectors were worse off as investors prepared for the two-day FOMC meeting that begins on Tuesday, where the market is expecting a rate hike. The Consumer Staples sector was down 1.5% and Real Estate lower by 1.9%. Treasury yields also rose after ECB President Mario Draghi warned of stronger inflation in the European Economy. US 10-Year notes rose to yield 3.089% and US 2-Year notes rose to yield 2.821%.

In currency markets, on the back of Mario Draghi’s speech, the euro rose 0.1% to $1.1755 after a high of $1.1815 against the dollar and against the yen the dollar rose 0.1% to 112.65 yen. The dollar index was little unchanged at 94.192.

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Chart of the Day: Brent Crude daily chart 

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Topics: +U.S. Market Wrap