EMC: US dollar basket remains at 10-month high

Equity overview

Equity markets mostly fell on Tuesday in the Asia-Pacific region, despite a positive session in the US. In Europe, indices opened lower.

DXY

The dollar basket set a new 10-month high on Monday afternoon; a combination of resilient economic data, backed by a hawkish Federal Reserve (Fed) rhetoric. Ten-year treasury yields were up more than 45 basis points in September to top 4.5% for the first time since 2007.

Credit rating agency Moody's has said that a potential US government shutdown later this month would reflect negatively on the country's rating. The agency said on Monday a shutdown would "underscore the weakness of US institutional and governance strength relative to other AAA-rated sovereigns that we have highlighted in recent years."

Moody's is the last of the three major credit agencies to assign the US a pristine rating.

Earnings

ASOS sales declined 15%, as expected. The group said the recovery is progressing but expects full-year EBIT at the bottom of the guided range.

Smiths Group posted a 20% rise in operating profit in the 12 months to the end of July. The British technology group benefited from demand for scanners, valves and connectors soared, helped by decarbonisation trends.

The Air France-KLM Group is renewing its widebody fleets. After the close last night, it was announced that the group would order 50 Airbus A350s, as the airline group needs to replace ageing Boeing 777s and Airbus A330s.

Costco Wholesale earnings are expected to rise by 13% to $4.79 per share in the fourth quarter. Revenue should rise by 7.8% to $77.78 billion, a solid performance considering the current climate, and the fact that a year ago, Costco posted a 15% revenue increase. This solidity was reflected in the share price, which is up 22% so far in 2023.