Market Update 24/10/2024

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US equities faced pressure overnight, with tech stocks struggling and rising US interest rates adding weight. The S&P 500 dropped 1.4%. At the close, the Euro Stoxx 50 slipped 0.3%, while the FTSE 100 fell 0.6%. The US 10-year Treasury yield increased by 3bps to 4.24%. Gold fell from a record high, down 1.3% to USD 2,714.1/oz.

There was only second-tier US economic data. Existing home sales fell 1% m/m to 3.84m, falling short of expectations and marking the lowest level in nearly 14 years. It’s likely that buyers are holing off on major purchases due to the upcoming presidential election. The median home price rose 3% y/y to USD 404.5k. With an average mortgage rate at 4% for existing loans compared to 6.5% for new ones, homeowners are less motivated to sell or move.

The Bank of Canada lowered rates by 0.50%, in line with market expectations. Key factors for the decision included progress on reducing inflation, easing core inflation, and a slight downgrade in growth forecasts. The BoC indicated that further rate cuts are likely if the economy continues to develop as expected. The CAD remained stable.

USD continued to strengthen overnight, building on gains that started earlier in the month as the market scaled back expectations of Fed rate cuts. Increased uncertainty around the upcoming US election is also adding support. The US dollar index rose by 0.4%, reaching its highest point since July.

NZDUSD dipped below 0.6000, reaching its lowest level since mid-August. If we see a rebound, there could be resistance near 0.6020, which acted as support recently. However, any rallies are likely to be limited due to current USD sentiment. There’s some potential support around the 0.5980-0.5990 range, but movements are largely driven by USD strength, rather than NZD factors at the moment.

NZDJPY briefly reached 92.00 before retreating to 91.70, driven by significant gains in the USD, with USDJPY surpassing 153.15 earlier.

NZDEUR has weakened, dropping to 0.5568. Today’s attention will be on the advance PMIs for Europe. The ECB mentioned recent unexpected declines in economic activity in its statement following last week’s rate cut decision. The general expectation is that European PMIs will remain relatively unchanged from September.

It is another quiet day on the economic calendar with no major domestic or regional data. Tonight, we’ll receive EU & US PMI’s long with US initial Jobless Claims.

Here are the latest mid-market rates:

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