Round up of today’s market news

North American News

Major US Indices Show Mixed Results: Nasdaq Rises, S&P and Dow Decline

Market Performance
Today’s trading session for major US stock indices ended with mixed results. The Dow Industrial Average led the declines, falling by 0.80%. In contrast, the Nasdaq managed a modest increase of 0.27%, while the S&P 500 fell slightly by 0.18%.

Dow Losers
Within the Dow, 12 out of 30 stocks experienced declines of 1% or more, with the following notable losers:

• American Express: -2.19%
• Merck & Co: -2.17%
• Travelers: -2.17%
• Home Depot: -2.06%
• Goldman Sachs: -2.02%
• Nike: -1.74%
• Dow Inc.: -1.69%
• Amgen: -1.53%
• Coca-Cola: -1.41%
• Johnson & Johnson: -1.39%
• Visa A: -1.30%
• Procter & Gamble: -1.02%

Dow Performers
Despite the overall decline, a few stocks within the Dow managed to post gains, with Boeing being the standout performer, rising by 3.11%. Apple also saw a slight increase of 0.66%, with only 7 out of 30 Dow stocks closing positive today.

Other Notable Winners
Several other stocks outside the Dow performed well, including:

• Trump Media & Technology Group: +5.81%
• NVIDIA: +4.14%
• Zoom Video: +2.34%
• SoFi Technologies: +2.21%
• Uber Technologies: +1.68%
• Fortinet: +1.25%
• AMD: +1.24%
• Schlumberger: +1.22%
• Super Micro Computer: +1.14%
• Netflix: +1.09%

The mixed performance reflects varied investor sentiment across different sectors as market dynamics continue to evolve.

US Sept leading indicators -0.5% vs -0.3% expected

• Leading indicators from The Conference Board

• Prior was -0.2%
• Six-month decline accelerates to 2.6%, worse than previous 2.2% fall

Comments:

“Weakness in factory new orders continued to be a major drag on the US LEI in September as the global manufacturing slump persists,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “Additionally, the yield curve remained inverted, building permits declined, and consumers’ outlook for future business conditions was tepid. Gains among other LEI components were not significant enough to offset weakness among the four gauges mentioned above. Overall, the LEI continued to signal uncertainty for economic activity ahead and is consistent with The Conference Board expectation for moderate growth at the close of 2024 and into early 2025.“

Fed’s Kashkari: A rising budget deficit would mean interest rate would be higher

• Minneapolis Fed Pres. Kashkari speaking

• Rising budget deficit would on the margin mean interest rates would be higher
• It was not the labor market that caused inflation
• Very few transactions happened on crypto, unless it’s drugs or illegal activity
• Immigration policy will affect our reading of the labor market
• Tariffs shouldn’t be themselves leading to ongoing inflation probably a one-time change in price level
• Definitely want to avoid a recesion.
• Saw signs of labor market weakness which is why cut 50 bps
• Going forward, we will look at all the data to decide on rate policy.
• Evidence of quick labor market weakening could lead to faster rate cuts
• Right now I see modest cuts over the next quarters
• Excess consumer savings have been spent down.
• Lower credit score borrowers delinquencies are climbing.
• On average consumers seem like they are doing fine.
• Monetary policies role in bringing down inflation was probably mainly in anchoring inflation expectations, not on reducing demand.

Fed’s Logan: Expects gradual cuts if the economy meets forecasts

• Comments from the Boston Fed President

• Fed will need to be nimble with mon pol choices
• Economy is strong and stable
• Sees downside risk to job market, ongoing risks to inflation goal
• Balance sheet cuts and rate cuts working in same direction
• Liquidity still abundant in money markets
• Over time wants ‘negligible’ balances in reverse repo facility
• Fed could change reverse repo rate if cash doesn’t leave facility
• Business contacts are optimistic, aware of risks
• I pay a lot of attention to financial conditions indexes

Commodities

Silver Surges Past $34.00 Amid Middle East Tensions and US Election Uncertainty

Market Performance
Silver has soared above $34.00 in Monday’s North American session, reaching levels not seen in nearly 12 years. The white metal’s rally is fueled by escalating geopolitical tensions in the Middle East and rising uncertainty surrounding the upcoming US presidential elections.

Geopolitical Factors
The ongoing conflict between Israel and Iran has intensified, with Israel pledging retaliation against Iran’s October 1 attack, as reported by The New York Times. Leaked documents from the National Security Agency (NSA) and Geospatial Intelligence Agency (GEOIN) have added to the concerns, driving investors towards precious metals like silver as safe-haven assets. Additionally, the tight race between US Vice President Kamala Harris and former President Donald Trump for the November 5 elections has further heightened silver’s appeal.

Economic Insights
The US Dollar has made a strong comeback after a brief correction, supported by expectations that the Federal Reserve will implement moderate policy easing for the remainder of the year. The US Dollar Index (DXY), which measures the dollar against six major currencies, is aiming to reclaim the 11-week high of around 104.00.

Looking Ahead
Investors will be closely monitoring the upcoming US flash S&P Global PMI data for October, scheduled for release on Thursday, as it may influence market sentiment and precious metals prices.

Technical Analysis
Silver’s price has strengthened following a breakout above the horizontal resistance established from the May 21 high of $32.50. The upward-sloping 20- and 50-day exponential moving averages (EMAs) at approximately $30.70 and $31.70 signal the potential for further upside momentum.

Crude oil settle at $70.56

• Up $1.34 or 1.94%

Crude oil futures are settling at $70.56. That’s up $1.34 or 1.94% on the day. The low for the day reached $68.50. The high for the day reached $70.36.

Citi upgrades 0 to 3-month-old forecast for gold to $2800 versus $2700

• The six-month target is now $3000 an ounce

Citi has upgraded its:

• 0 to 3 month forecast for gold to $2800 from $2700.
• Sets 6-12 month target to $3000 an ounce.
• Increases 6– 12 month target for silver from $38 an ounce to $40 an ounce

Gold is currently trading near unchanged at $2720.60

Concern over oil market oversupply fears might be exaggerated

• Supply data is muddy

In a note last week from Standard Chartered analysts at the bank said oil market sentiment, especially among speculative traders, is highly bearish, similar to levels seen in 2008 during the Global Financial Crisis.

Concerns center on:

• expectations of macroeconomic hard landings,
• weak oil demand,
• fears of oversupply in 2025

Stan Chart say that the concern over oversupply fears might be exaggerated due to unclear supply data.

• There is a notable difference between the demand growth estimates of the International Energy Agency (IEA) and OPEC Secretariat. The IEA estimates higher OPEC+ oil output compared to the U.S. Energy Information Administration (EIA).
• the differences in supply estimates are critical, as the IEA’s 2025 oversupply forecast could be based on “ghost” barrels, contributing to bearish sentiment and lower prices in 2024.
• Russia, Iraq, and Kazakhstan have submitted plans to compensate for overproduction, with full compensation expected by September 2025
• oil traders are reacting to short-term geopolitical news but not pricing in potential long-term changes, particularly regarding Iran. Oil prices are expected to rise once short-term issues settle.

UBS like gold higher, point to history indicating up to a further 10% rise

• Gold and oil view.

UBS Global Wealth Management like both oil and gold, citing market uncertainty and the Fed easing.

UBS point out that markets are trimming expectations of further Fed easing’s , but nevertheless see more cuts ahead. Analysts highlight gold historically rising by up to 10% following the first Federal Open Market Committee (FOMC) rate cut. UBS also point to ETF demand gathering pace.

EU News

European shares close lower. German DAX falls

The German Dax closed at record highs on Monday, Thursday and Friday last week, moving above the high close going back to September 27. Today, however, the index fell by around 1% leading the way lower for the major European indices.

A snapshot of the Europe closes fo the day are showing:

• German Dax, -1.02%
• France’s CAC, -1.01%
• UK’s FTSE 100, -0.48%
• Spain’s Ibex, -0.71%
• Italy’s FTSE MIB, -0.71%

Germany September PPI -0.5% vs -0.2% m/m expected

• Latest data released by Destatis – 21 October 2024

• Prior +0.2%
• PPI -1.4% vs -1.0% y/y expected
• Prior -0.8%

A fall in energy prices was the main drag as if you exclude that, producer prices were seen down just 0.1% on the month. Looking at the details, there were declines for prices for intermediate goods (-0.2%) while capital goods and durable consumer goods were unchanged. Meanwhile, the prices for consumer goods in general were seen up (+0.2%).

SNB total sight deposits W.E. 18 October CHF 462.3 bn vs CHF 467.1 bn prior

• Latest data released by the SNB – 21 October 2024
• Domestic sight deposits CHF 454.1 bn vs CHF 459.4 bn prior

Swiss sight deposits fell again in the past week, continuing to keep within levels seen in the last few months after a slight rise towards the end of September. Here’s a look at the trend:

BOE’s Greene: Cautious and gradual approach to easing is appropriate

• Comments from the BOE external member in an FT column

The BOE’s Megan Greene wrote a column in the FT.

• UK consumption recovery lags behind other developed economies
• UK savings rate high at 10% vs 5% in the US
• Three factors damping UK consumption:
  1. Precautionary savings due to cost of living crisis
  2. Restrictive monetary policy
  3. Interest rate changes impacting household incomes
• Discretionary spending remains below pre-pandemic levels
• Higher interest rates incentivize savings, delay purchases
• Household income from interest on savings has increased
• Full impact of higher rates on mortgages not yet felt

ECB’s Kažimír says all options are on the table for December meeting

• Remarks by ECB policymaker, Peter Kažimír

• December meeting is wide open
• Will be in a strong position to ease further if accelerated pace of disinflation continues
• Increasingly confident that disinflation path is on solid footing
• But still need more evidence, especially on services inflation

ECB’s Šimkus says lower rates possible if disinflation gets entrenched

• Remarks by ECB policymaker, Gediminas Šimkus

• Cannot predict outcome of December’s meeting
• Risks to economic growth are skewed to the downside
• Services inflation remains high
• But disinflation trend is on a stable track

ECB’s Villeroy says probably more rate cuts, data dependent – “agile pragmatism”

• Sees inflation at 2% in the next few months
• He spoke in an interview with French radio on Saturday, flagging falling inflation and further rate cuts ahead:

• we’re on a good way to defeat inflation
• this is actually good news
• may be some temporary rebounds in coming months, but that’s a technical effect
• barring large external shocks, we’ll be a 2% of inflation next year, probably rather toward the beginning of next year

Villeroy also flagged further rate cuts ahead:

• will probably be other rate cuts
• we will decide depending on data
• “I’m calling for agile pragmatism: Agile because we must move and cut rates when we can. Pragmatism, because we must look at the data and not lose sight of the forest for the trees.”

ECB Lagarde ‘data dependence’ is a smokescreen, December rate cut ahead

• The next European Central Bank monetary policy meeting is on December 12
• TD cites:

• ECB officials (members of the Bank’s rate setting committee, the Governing Council) have opened up the door sidely to cuts
• the data-dependent ‘one meeting at a time’ messaging is still there but anything other than a December rate cut is unlikely

Asia-Pacific-World News

UBS raised its 2024 forecast for China’s full-year real GDP growth to 4.8% (from 4.6%)

• 2025 also raised

UBS raised its 2024 and 2025 GDP growth forecasts for China, citing faster-than-expected GDP growth in 3Q, and recent government policy support announcements

Forecasts now:

• GDP growth for 4Q to rise to 6.5% q/q
• GDP growth for 4Q to remain at 4.6% y/y
• Full-year 2024 real GDP growth raised to 4.8% (prior forecast 4.6%)
• 2025 real GDP growth forecast to 4.5% (prior 4.0%)

PBOC sets USD/ CNY reference rate for today at 7.0982 (vs. estimate at 7.0990)

• PBOC CNY reference rate setting for the trading session ahead

In open market operations (OMOs):

• PBOC injects 209bn yuan via 7-day RR, sets rate at 1.5%
• 43bn mature today in OMOs
• net injection is 166bn

China cuts 1 and 5 year rates by 25bp each, as expected

• People’s Bank of China Loan Prime Rate (LPR) setting

People’s Bank of China sets Loan Prime Rates (LPR), a rate cut as expected

1 year to 3.10%

• from 3.35%

5 year to 3.6%

• from 3.85%

RBA dep Gov Hauser says monetary policy is ready to respond in either direction

• Reserve Bank of Australia Deputy Governor Hauser speaks in a ‘fireside chat’ format at the CBA 2024 Global Markets Conference in Sydney:

• slightly surprised employment growth has been so strong
• labour participation rate is strikingly high
• RBA is data dependent but not data obsessed
• will take into account Q3 CPI, other data, to form a view on policy
• acutely conscious that the outlook is uncertain
• policy is ready to respond in either direction
• we are alert and ready to act

New Zealand credit card spending -3.2% y/y in September (prior -3.1%)

• Data from the Reserve Bank of New Zealand

New Zealand credit card spending for September 2024

-3.2% y/y

• prior -3.1%

-0.4% m/m

• prior -0.4%

MUFG sees a growing case for the BoJ to raise rates again before year-end

• Yen gains could be limited if Trump wins election

Synopsis: MUFG discusses the increasing likelihood of the Bank of Japan (BoJ) implementing another rate hike before the end of the year, driven by recent economic indicators and financial market performance.

Key Points:

• Yen Weakness and USD/JPY Levels: The Japanese yen has given back nearly 50% of the gains it achieved during the summer, leading USD/JPY to rise above the 150.00 level this week.

• Recovery in Japanese Equities: The Japanese equity market has fully recovered from summer losses, indicating improved financial stability risks, which could encourage the BoJ to maintain or accelerate its rate hike trajectory.

• Election Impact: Expectations for BoJ rate hikes may be advanced following the upcoming general election on October 27. This development could serve as a catalyst for further JPY appreciation later in the year.

• Geopolitical Considerations: However, any potential gains for the yen may be overshadowed if Donald Trump wins the US presidential election, which could result in higher US yields and strengthen the USD.

Conclusion: MUFG sees a growing case for the BoJ to raise rates again before the year ends, contingent on Japan’s economic performance and post-election developments. The upcoming general election is critical, but external factors such as US political outcomes may influence the effectiveness of any JPY gains.

Data from South Korea shows exports falling y/y in the first 20 days of the month

• First drop in 13 months

South Korea 1 – 20 October trade data:

Exports -2.9% y/y

• semiconductor exports +36.1%
• cars -3.3%
• to China + 1.2%
• to the United States -2.6%
• to the European Union -8.9%

Import -10.1% y/y

Info via Reuters.

Cryptocurrency News

Crypto Market Update: Bitcoin, Ethereum, and XRP Experience Corrections Amid Upcoming Unlocks

Market Overview
Bitcoin has dropped by 2% on Monday, trading around $67,000. Ethereum is holding steady above $2,600 but is down nearly 3%, while XRP corrects slightly, trading near $0.55 as traders assess recent legal developments.

Bitcoin, Ethereum, and XRP Insights
Bitcoin remains above $67,000, experiencing a 2% decline despite seven consecutive days of positive flows in Spot Bitcoin ETFs. Ethereum is currently priced at $2,669, reflecting a 3% correction. XRP sees a modest correction of less than 1%, maintaining a position above $0.55 as traders process the SEC’s appeal in the Ripple lawsuit and Elon Musk’s recent remarks about the altcoin, where he clarified he does not endorse XRP.

Market Updates
In significant market developments, Stripe has acquired the stablecoin platform Bridge for $1.1 billion, marking a notable investment in the crypto space. Bitcoin is edging closer to the $70,000 mark, with traders speculating on a potential return to its all-time high of $73,777. Additionally, Open Interest in USD-denominated Bitcoin futures has surged past $40 billion, setting a new record, according to Coinglass.

Industry News
Coinbase Assets has announced the availability of Flare (FLR), Injective Protocol (INJ), The Sandbox (SAND), and Stacks (STX) to New York residents via its iOS and Android apps. Meanwhile, VanEck has introduced a staking feature for its Solana Exchange Traded Note (ETN), allowing users to receive staking rewards reflected in their token equity as part of the daily terminal value.

Ethereum Faces Resistance: Demand Boost Needed to Sustain Gains

Ethereum Price Correction as Resistance Emerges
Ethereum’s price stands at $2,600, experiencing a decline of about 3% on Monday as it approaches a key resistance level at the descending trendline of $2,820. This follows a notable rally of over 11% last week, indicating a potential correction as traders react to the resistance.

Accumulation Addresses Hit Record Levels
Despite the recent price drop, the total amount of ETH held in accumulation addresses has surged to a new all-time high, exceeding 19.17 million ETH. This significant increase—nearly doubling from 11.5 million ETH in January—reflects growing investor confidence in Ethereum, which may bolster its long-term bullish outlook.

Mild Inflows Signal Institutional Interest
The recent week saw US spot Exchange Traded Funds (ETFs) recording a mild increase in inflows, totaling $78.8 million, compared to only $1.9 million the previous week. This rise in institutional demand has contributed to Ethereum’s price stability, but for a more substantial rally to occur, the magnitude of these inflows will need to escalate.

Market Outlook
As Ethereum navigates this correction phase, investor confidence remains pivotal. The combination of record accumulation levels and increasing ETF inflows suggests that while short-term fluctuations may occur, the underlying demand for Ethereum could support a rebound if it can overcome current resistance levels.

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