- US stocks finished mostly lower in cautious trade heading into the US Presidential Election on Tuesday and with price action in markets primarily categorised as an unwinding of the 'Trump trade' after weekend polls and betting markets showed Trump losing momentum against Harris. This provided early headwinds for the dollar and underpinned bonds although price action was contained during the New York session with the contest for the battleground states seen very tight as the US prepares to vote.
- USD weakened as a function of an unwinding of the 'Trump trade' after US election polling across the weekend provided Harris with some late momentum, resulting in betting markets scaling back their bets of the former President to win the election, while newsflow was light and the data showed US Factory Orders contracted as expected.
- Looking ahead, highlights include South Korean CPI, New Zealand ANZ Commodity Prices, Chinese Caixin Services & Composite PMI, Singapore Retail Sales, RBA Rate Decision, SoMP & Governor Bullock's Post-Meeting Press Conference, Comments from RBNZ Governor Orr.
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LOOKING AHEAD
- Highlights include South Korean CPI, New Zealand ANZ Commodity Prices, Chinese Caixin Services & Composite PMI, Singapore Retail Sales, RBA Rate Decision, SoMP & Governor Bullock's Post-Meeting Press Conference, Comments from RBNZ Governor Orr.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks finished mostly lower in cautious trade heading into the US Presidential Election on Tuesday and with price action in markets primarily categorised as an unwinding of the 'Trump trade' after weekend polls and betting markets showed Trump losing momentum against Harris. This provided early headwinds for the dollar and underpinned bonds although price action was contained during the New York session with the contest for the battleground states seen very tight as the US prepares to vote.
- SPX -0.28% at 5,713, NDX -0.35% at 19,964, DJI -0.61% at 41,795, RUT +0.40% at 2,219.
- Click here for a detailed summary.
NOTABLE HEADLINES
- US Presidential candidate Trump's campaign is preparing staff members to wind down the operation whilst privately acknowledging that Trump could lose the US election, according to Axios citing sources.
DATA RECAP
- US Factory Orders MM (Sep) -0.5% vs. Exp. -0.5% (Prev. -0.2%, Rev. -0.8%)
FX
- USD weakened as a function of an unwinding of the 'Trump trade' after US election polling across the weekend provided Harris with some late momentum, resulting in betting markets scaling back their bets of the former President to win the election, while newsflow was light and the data showed US Factory Orders contracted as expected.
- EUR initially benefitted from the dollar weakness but then partially faded the gains after failing to sustain the 1.0900 status.
- GBP eked marginal gains after early momentum was thwarted by resistance just shy of the 1.3000 handle as sterling watchers also await the BoE on Thursday where the central bank is expected to deliver a 25bps rate cut to the Bank Rate.
- JPY strengthened but was well off today's best levels after USD/JPY rebounded from a brief dip beneath the
FIXED INCOME
- T-notes gained with the bull flattening in an unwinding of the 'Trump trade'.
COMMODITIES
- Oil prices began the week on a firmer footing amid several bullish catalysts including OPEC+ delaying the December oil output increase by one month and geopolitical tensions with Iran planning a strong and complex response to Israel, while Israeli media also reported that Israel's response to any Iranian attack would be stronger than the previous time.
- OPEC Secretary General Al Ghais said they are very positive on both short- and long-term demand. Furthermore, he said there are challenges, but the picture is not as negative as some make it sound, while peak demand will not happen and the world continues to grow.
- UAE's ADNOC set December Murban crude OSP at USD 74.87/bbl (prev. 73.41/bbl in November).
- Iran approved a plan to increase oil production by 250k BPD, according to the Iranian Oil Ministry website cited by Reuters.
- Libya's oil production was reportedly nearing 1.5mln BPD.
GEOPOLITICAL
MIDDLE EAST
- Israel's response to any Iranian attack will be stronger than the previous time, according to Al Jazeera citing Israel's Channel 12.
- Estimates in the Israeli security establishment indicate that Iran is ready to respond, although the timing is unclear and the Israeli-American deployment should ensure relative success in intercepting Iranian attack, according to Al Jazeera citing Haaretz.
- Syrian news agency reported preliminary information about an Israeli attack targeting the vicinity of Sayyida Zeinab, south of Damascus, according to Sky News Arabia, while it was noted that several IRGC and Hezbollah sites were targeted. Furthermore, the Israeli Air Force confirmed it struck Hezbollah intelligence assets near Damascus, targeting key infrastructure in Syria.
- US and Saudi Arabia are discussing a possible security agreement that wouldn't involve a broader deal with Israel, according to Axios.
OTHER
- Western security officials said they believe that two incendiary devices shipped via DHL were part of a covert Russian operation that ultimately aimed to start fires aboard cargo or passenger aircraft flying to the US and Canada, according to WSJ.
- North Korea's UN envoy told the Security Council that Pyongyang will accelerate a build-up of its nuclear force to counter "any threat presented by hostile nuclear weapons states".
- Top diplomats in the EU and South Korea are concerned about the possibility of any transfer of nuclear or ballistic missile-related technology to North Korea.
ASIA-PAC
NOTABLE HEADLINES
- China's Commerce Ministry filed a lawsuit against the EU's final EV tariff. It was also reported that the China Mission to WTO said it has initiated a WTO dispute against the EU on November 4th over countervailing duty measures on new battery EVs.
- China's NPC reviewed a local government debt swap and reviewed the bill on raising the ceiling on local government debt to replace existing hidden debt, according to Xinhua.
- US chip toolmakers move to cut China from supply chains with Applied Materials (AMAT) and Lam Research (LRCX) telling vendors to follow new restrictions amid US government pressure, according to WSJ.
EU/UK
NOTABLE HEADLINES
- ECB's Elderson said they are pushing banks to improve risk data aggregation and are using more intrusive tools to push banks.
- German Economy Minister said need to plug the gap in the budget and it is a solvable challenge, while the minister added if the budget fails, there will be an impasse.
- French Finance Minister said they will push the European Commission to reconsider fines on auto names which are set to be imposed for insufficient efforts to increase EV shares, according to FT.
DATA RECAP
- EU Sentix Index (Nov) -12.8 vs. Exp. -12.5 (Prev. -13.8)
- EU HCOB Manufacturing Final PMI (Oct) 46.0 vs. Exp. 45.9 (Prev. 45.9)
- German HCOB Manufacturing PMI (Oct) 43.0 vs. Exp. 42.6 (Prev. 42.6)
- French HCOB Manufacturing PMI (Oct) 44.5 (Prev. 44.5)
- Italian HCOB Manufacturing PMI (Oct) 46.9 vs. Exp. 48.5 (Prev. 48.3)
