- US stocks were pressured with the Nasdaq 100 leading the declines seen across the major indices as the tech sector suffered heavy losses owing to weakness in mega-cap names including Microsoft (MSFT)(-6%) and Meta (META)(-4.1%) post-earnings. Furthermore, participants digested a slew of mixed data releases, while attention was also on geopolitics after a report that Israeli intelligence suggested Iran is preparing to attack Israel from Iraqi territory in the coming days.
- USD mildly weakened and the DXY retreated beneath the 104.00 level amid pressure from a firmer yen and euro, while the latest data releases were mixed as most PCE Price metrics matched estimates but Employment Costs were slightly softer than expected and Initial Jobless Claims declined, although the attention now turns to the incoming key US jobs data.
- Looking ahead, highlights include South Korean Trade Data, Australian Building Approvals & PPI, Asian PMIs, Chinese Caixin Manufacturing PMI, Australian Supply, India & Philippines Holiday Closures.
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LOOKING AHEAD
- Highlights include South Korean Trade Data, Australian Building Approvals & PPI, Asian PMIs, Chinese Caixin Manufacturing PMI, Australian Supply, India & Philippines Holiday Closures.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks were pressured with the Nasdaq 100 leading the declines seen across the major indices as the tech sector suffered heavy losses owing to weakness in mega-cap names including Microsoft (MSFT)(-6%) and Meta (META)(-4.1%) post-earnings. Furthermore, participants digested a slew of mixed data releases, while attention was also on geopolitics after a report that Israeli intelligence suggested Iran is preparing to attack Israel from Iraqi territory in the coming days.
- SPX -1.86% at 5,705, NDX -2.44% at 19,890, DJIA -0.90% at 41,763, RUT -1.63% at 2,197.
- Click here for a detailed summary.
NOTABLE HEADLINES
- White House CEA Chair said real pay is up and the underlying economy remains solid, while it was noted that the jobs report could be distorted by hurricanes.
- Harris campaign official rejected Trump's claims of election fraud in Pennsylvania and said the system is working as it should to identify a small number of problems.
DATA RECAP
- US PCE Price Index MM (Sep) 0.2% vs. Exp. 0.2% (Prev. 0.1%);
- US PCE Price Index YY (Sep) 2.1% vs. Exp. 2.1% (Prev. 2.2%, Rev. 2.3%)
- US Core PCE Price Index MM (Sep) 0.3% vs. Exp. 0.3% (Prev. 0.1%, Rev. 0.2%)
- US Core PCE Price Index YY (Sep) 2.7% vs. Exp. 2.6% (Prev. 2.7%)
- US Employment Costs (Q3) 0.8% vs. Exp. 0.9% (Prev. 0.9%)
- US Personal Income MM (Sep) 0.3% vs. Exp. 0.3% (Prev. 0.2%)
- US Consumption, Adjusted MM (Sep) 0.5% vs. Exp. 0.4% (Prev. 0.2%, Rev. 0.3%)
- US Initial Jobless Claims w/e 216.0k vs. Exp. 230.0k (Prev. 227.0k, Rev. 228k)
- US Continued Jobless Claims w/e 1.862M vs. Exp. 1.885M (Prev. 1.897M, Rev. 1.888M)
- US Chicago PMI (Oct) 41.6 vs. Exp. 47.0 (Prev. 46.6)
FX
- USD mildly weakened and the DXY retreated beneath the 104.00 level amid pressure from a firmer yen and euro, while the latest data releases were mixed as most PCE Price metrics matched estimates but Employment Costs were slightly softer than expected and Initial Jobless Claims declined, although the attention now turns to the incoming key US jobs data.
- EUR was firmer for the fourth consecutive day following firmer-than-expected EU inflation data but with gains capped as the single currency remained within the 1.0800 handle against the dollar.
- GBP was pressured and retreated from resistance at the 1.3000 level to briefly below 1.2900 as Gilts remained pressured in a continued fallout from the UK Budget announcement.
- JPY outperformed with USD/JPY attempting to break beneath the 152.00 level in the aftermath of the BoJ policy decision and Governor Ueda's press conference where he downplayed concerns over financial stability risks acting as an impediment to further policy tightening.
FIXED INCOME
- T-notes declined but settled off their lows with the downside largely led by Gilts with two-way price action on US data.
COMMODITIES
- Oil prices were firmer as they benefitted from the initial dollar weakness and an ever-continuing tense Middle Eastern situation with a recent report noting that Iran is preparing a major retaliatory strike from Iraq within days.
- Energy Intel's Bakr said "They didn’t even talk about this yet" regarding recent OPEC+ source reports that the group could delay a planned oil output hike.
GEOPOLITICAL
MIDDLE EAST
- Iran is reportedly preparing a major retaliatory strike from Iraq within days, according to Axios.
- Israeli PM Netanyahu said Israel has freedom more than ever to act in Iran and can reach anywhere in Iran as needed. It was also reported that Mossad noted the movement of ballistic missiles in Iran.
- Israeli official told ABC News there is significant progress towards a ceasefire in Lebanon after several days of meetings, according to Asharq News.
- US officials discussed a draft agreement allowing Israel to continue striking Lebanon for two months after an agreement, according to Sky News Arabia. Furthermore, the draft agreement calls on Israel to withdraw from Lebanon after one week to deploy the Lebanese army in the south and help dismantle Hezbollah's infrastructure, although Israeli PM Netanyahu's close associates do not expect to reach an agreement before the US elections.
- US Secretary of State Blinken said there is 'good progress' towards a ceasefire in Lebanon.
- US envoy Hochstein is not expected to go to Beirut and will return to Washington from Israel on Thursday, according to Axios.
- CNN reported that US officials doubt the possibility of reaching a ceasefire before the presidential election, according to Sky News Arabia.
- Egypt denied what was reported by media outlets about Alexandria port receiving the MV Kathrin vessel carrying military supplies for Israel, according to Al Qahera News TV citing a high-level source.
- Saudi Foreign Minister said Saudi-Iran relations are moving in the right direction but are complicated by regional dynamics, while Iran informed Saudi that the continuation of regional escalation is not in its interest, and it was said that ceasefire negotiations in Gaza have collapsed due to new demands from Israel.
OTHER
- Russian Foreign Minister Lavrov said a Russia and Iran agreement is to be signed soon which will envisage a closer defence cooperation.
- US Secretary of State Blinken condemned North Korea’s ballistic missile launch in the strongest terms and said as many as 8k North Korean troops are deployed in the Kursk region.
ASIA-PAC
NOTABLE HEADLINES
- PBoC conducted net purchases of bonds worth CNY 200bln in October in the open market and conducted CNY 50bln of outright reverse repos in October.
EU/UK
NOTABLE HEADLINES
- UK PM Starmer's spokesperson, when asked about the market reaction to the budget, said they do not comment on market movements and the Budget has been about restoring fiscal stability, while there are two new robust fiscal rules.
- UK Chancellor Reeves said tax increases in the Budget were necessary and have put UK public finances on a stable trajectory, while she vowed fiscal stability.
- ECB's Panetta said rates need to come down and inflation is easing, while he added they need to pay attention to the weakness of the economy and the ECB needs to avoid the risk of pushing inflation below target.
- Swiss Finance Minister said they have not taken any decisions yet for systemically important banks and have not seen that Credit Suisse subsidiaries abroad were not capitalised enough.
DATA RECAP
- EU HICP Flash YY (Oct) 2.0% vs. Exp. 1.9% (Prev. 1.7%)
- EU HICP-X F&E Flash YY (Oct) 2.7% vs. Exp. 2.6% (Prev. 2.7%)
- EU Unemployment Rate (Sep) 6.3% vs. Exp. 6.4% (Prev. 6.4%, Rev. 6.3%)
- German Retail Sales MM Real (Sep) 1.2% vs. Exp. -0.5% (Prev. 1.6%)
- German Retail Sales YY Real (Sep) 3.8% vs. Exp. 1.6% (Prev. 2.1%)
- German Import Prices MM (Sep) -0.4% vs. Exp. -0.4% (Prev. -0.4%)
- German Import Prices YY (Sep) -1.3% vs. Exp. -1.4% (Prev. 0.2%)
