Round up of today’s market news

North American News

US Equity Market Recap: Strong Start Fades as Tech Holds Ground

Closing Changes for Main US Equity Indexes:
S&P 500: Flat
NASDAQ Composite: +0.6%
Russell 2000: -0.5%
Dow Jones Industrial Average: -0.6%

Weekly Performance:
S&P 500: -1.0%
NASDAQ Composite: +0.2%
Russell 2000: -3.0%

This week’s decline in the S&P 500 marks the end of a six-week winning streak, setting the stage for a critical earnings week ahead.

Market Overview
The S&P 500 rally lost momentum as underperformance in the banking sector weighed on broader markets, despite gains in technology stocks. The KBW Bank Index declined by 1.4%, led by New York Community Bancorp, which fell 8.3% after issuing weaker guidance. Other financial heavyweights, including Goldman Sachs and JPMorgan Chase, also posted losses of 2.3% and 1.2%, respectively. In the cryptocurrency space, Bitcoin dipped 2% following reports of a federal investigation into Tether for possible sanctions violations.

Key Market Drivers

• Tether Investigation: Federal scrutiny over Tether has raised concerns about regulatory implications for the broader cryptocurrency market.
• Banking Sector Weakness: With significant banks missing expectations, sentiment in the financial sector remains cautious.
• Earnings Season: The upcoming earnings reports from major tech firms like Alphabet, Meta, and Amazon are highly anticipated, with expectations for double-digit growth due to robust advertising and advancements in AI.

Market Performance Details

• S&P 500: Finished flat after an earlier rise of 1%, dragged down by bank weakness.
• NASDAQ Composite: Rose 0.6%, supported by tech gains as investors positioned themselves ahead of a crucial earnings week.
• Dow Jones Industrial Average: Fell 0.6%, reflecting challenges faced by blue-chip stocks amidst banking sector concerns.

Sector Performance

• Communication Services: +0.7%
• Information Technology: +0.6%
• Consumer Discretionary: +0.5%
• Financial Sector: -1.1%

Economic Data Review

• September Durable Orders: -0.8% (revised from 0.0%)
• Durable Goods Ex Transportation: +0.4% (revised from 0.5%)
• October University of Michigan Consumer Sentiment: Final reading at 70.5, up from 68.9. This marks the third consecutive month of increasing consumer sentiment, despite prevailing election uncertainties.

Looking Ahead
Next week is pivotal for the stock market, with five of the “Magnificent Seven” expected to report earnings. Additionally, investors are eyeing upcoming jobs data, which could influence the Federal Reserve’s rate path moving forward. The market remains cautious, with upcoming economic indicators and the U.S. presidential election on the horizon shaping investor sentiment.

Atlanta Fed Q3 GDPNow 3.3% vs 3.4% prior

• The latest GDP tracker ahead of Wednesday’s released

The Atlanta Fed GDPNow tracker for Q2 was trimmed to 3.3% from 3.4% today. The economist consensus for Wednesday’s advanced report is 3.0%.

In their own words:

After recent releases from the US Census Bureau and the National Association of Realtors, the nowcast of third-quarter real gross private domestic investment growth decreased from 3.2 percent to 2.7 percent.

US UMich October final consumer sentiment 70.5 vs 69.0 expected

• October US consumer sentiment

• Prior was 68.9
• Current conditions 64.9 vs 62.7 prelim
• Expectations 74.1 vs 72.9 prelim
• 1-year inflation 2.7% vs 2.9% prelim
• 5-year inflation 3.0% vs 3.0% prelim

US September durable goods orders -0.8% versus -1.0% expected

• US September durable goods orders

• Prior month 0.0% revised sharply lower to -0.8%
• Durable goods orders -0.8% versus 1.0% expected
• Prior month ex transportation 0.5% revised to +0.6%
• Ex Transportation 0.4% versus -0.1% expected
• Non-Defense cap Ex air 0.5% versus 0.1% expected. Prior month 0.2%
• Durable goods ex defense -1.1% versus -1.3% last month (revised sharply lower from -0.2%)

The Non-Defense Cap ex air at +0.5% is a good number and should increase Q3 growth as a result. Below is the trend in chart of that series. So overall, the numbers are not that bad.

BOC Macklem: If population grows slows more than assumed, headline GDP will be lower

• Comments from the Bank of Canada Governor to journalists

• Having returned to low inflation, Canada is in a better place to deal with new economic shocks
• There’s a fair amount of uncertainty on how quickly Canada’s new immigration curbs kick in, BOC will be watching
• Effect of changes in assumptions about population growth will have a bigger impact on our GDP forecast that our inflation forecast
• If population growth slows faster than assumed, headline GDP will be lower than assumed

Canada September new housing price index 0.0% vs 0.0% prior

• Canada new housing price data for Sept 2024
• Prior was 0.0%

Canada August retail sales +0.4% vs +0.5% expected

• Canada retail sales data for August 2024 and preliminary September data

• Prelim was +0.5%
• Sept preliminary +0.4%
• Ex-autos -0.7% vs +0.3% expected
• Prior ex-autos +0.4%
• Ex-autos and gas -0.4% vs +0.6% prior
• Sales were up in four of nine subsectors

RBC analysts anticipate another 50bp rate cut in December from the Bank of Canada

• Citing economic slowdown and job market challenges

RBC on the Bank of Canada 50bp rate cut, analysts at the bank expect another 50bp cut at the December meeting:

• cut was in response to more and more signs that both the economy and the jobs markets are slowing down more than is needed in order hit 2% inflation target
• this cut will not the last, rates are still restricting
• 2025 will bring a more gradual pace of easing, down to 2% by July

Commodities

Crude Oil Climbs Over 1% Back Above $71

Crude Oil Performance: $71.25 (WTI), $75.07 (Brent)
Crude oil prices have rebounded, climbing over 1% as WTI crude trades at $71.25, while Brent crude is priced at $75.07. The uptick comes amidst geopolitical developments, particularly in Israel, as U.S. Secretary of State Antony Blinken intensifies diplomatic efforts aimed at negotiating a ceasefire between Israel and Iran.

Market Context
The U.S. Dollar Index has found support at 104.00, ahead of the upcoming U.S. Durable Goods report. The crude oil market remains attentive to potential diplomatic breakthroughs, which could positively influence the Biden administration’s standing, especially with the presidential election approaching on November 5.

Oil News and Market Movers
The International Energy Agency (IEA) has cautioned that global demand growth for oil is likely to weaken due to China’s economic slowdown and the increasing adoption of electric vehicles. As the week progresses, major oil companies, including BP, Shell, Chevron, and ExxonMobil, are scheduled to report their Q3 earnings, drawing significant market attention. Additional reports are expected from firms like PetroChina, Sinopec, and TotalEnergies.

In other market developments, Eni has sold a shipment of CPC Blend to ExxonMobil via the Platts window, while Neste’s CEO has indicated that this year has posed challenges for oil refining.

Silver Rebounds

Current Silver Price: $33.64
Silver has bounced back from a weekly low of $33.09, demonstrating bullish momentum as the Relative Strength Index (RSI) approaches overbought territory. However, it remains slightly below its opening price by 0.10% during Friday’s North American session.

Technical Outlook

Silver retains an upward bias despite recent dips. The RSI indicates momentum favoring buyers, suggesting that the path of least resistance is tilted upwards. Key resistance levels to watch include:

• October 24 High: $34.29
• Year-to-Date (YTD) High: $34.86
• October 2012 Peak: $35.40

Conversely, should Silver close bearishly, it may shift the bias to the downside. Initial support levels are identified as follows:

• October 24 Daily Low: $33.24
• Support Level: $33.00
• October 17 Swing Low: $31.32

A bearish close could lead to a more significant decline if the support levels are breached. Traders should closely monitor these levels to assess the potential direction of Silver prices in the coming sessions.

Baker Hughes Rig Count Update: U.S. Unchanged at 585, Canada Declines

U.S. Rig Count: 585 (unchanged from last week)
The U.S. Rig Count remains steady at 585 rigs. Within this total:

• Oil Rigs: Down 2 to 480
• Gas Rigs: Up 2 to 101
• Miscellaneous Rigs: Unchanged at 4

Year-over-year, the U.S. Rig Count has decreased by 40 rigs from 625. This includes a decline of 24 oil rigs and 16 gas rigs, while miscellaneous rigs have remained unchanged.

Additionally, the U.S. Offshore Rig Count has decreased by 2 to 16, reflecting a year-over-year drop of 8 rigs.

Canada Rig Count: 216 (down 1 from last week)
In Canada, the Rig Count has dipped by 1 to 216 rigs:

• Oil Rigs: Down 3 to 150
• Gas Rigs: Up 2 to 66
• Miscellaneous Rigs: Unchanged at 0

Compared to last year, Canada’s Rig Count is up by 20 rigs from 196, with oil rigs increasing by 28 and gas rigs decreasing by 8, while miscellaneous rigs have remained unchanged.

EU News

European equity close: A second flat day but declines on the week

• Closing changes in Europe on the day:

• Stoxx 600 flat
• German DAX flat
• France CAC -0.1%
• UK FTSE 100 -0.2%
• Spain IBEX -0.3%
• Italy’s FTSE MIB +0.1%

On the week:

• Stoxx 600 -1.2%
• German DAX -1.0%
• France CAC -1.5%
• UK FTSE 100 -1.3%
• Spain IBEX -1.0%
• Italy’s FTSE MIB -1.3%

Eurozone September M3 money supply +3.2% vs +3.0% y/y expected

• Latest data released by the ECB – 25 October 2024
• Prior +2.9%

Germany October Ifo business climate index 86.5 vs 85.6 expected

• Latest data released by Ifo – 25 October 204

• Prior 85.4
• Current conditions 85.7 vs 84.4 expected
• Prior 84.4
• Expectations 87.3 vs 86.8 expected
• Prior 86.3

France October consumer confidence 94 vs 94 expected

• Latest data released by INSEE – 25 October 2024
• Prior 95

UK October consumer confidence -21.0 (expected -21.0)

• UK data

UK GfK October consumer confidence -21.0

• expected -21.0, prior -20.0

ECB’s Lagarde: Disinflation process is well on track

• Comment from the ECB President:

• Risks to growth are tilted to the downside

ECB’s Kazaks says doesn’t see a case for rates to fall below neutral

• Remarks by ECB policymaker, Martins Kazaks

• No need for the ECB to contemplate such a scenario
• That would require weaker baseline and substantial undershooting of inflation target

Asia-Pacific-World News

PBOC conducts a 1 year MLF for 700bn yuan

• Medium-term Lending Facility (MLF)

Medium-term Lending Facility (MLF)

• 700bn injected
• 1 year
• 2% rate

789bn mature

PBOC sets USD/ CNY reference rate for today at 7.1090 (vs. estimate at 7.1087)

• PBOC CNY reference rate setting for the trading session ahead

In open market operations (OMOs):

• PBOC injects 292bn yuan via 7-day RR, sets rate at 1.5%
• 108bn mature today in OMOs
• net injection is 184 bn 

Many Chinese banks have cut mortgage rates today

• Global Times with the update

Chinese media outlet Global Times with a summary of cuts that came into effect today:

• many Chinese banks, including Industrial and Commercial Bank of China and Agricultural Bank of China, have cut some of their existing mortgage rates
• Mortgage rates that currently exceed loan prime rate (LPR)-30 basis points (BP) will be reduced uniformly to LPR-30BP
• After the adjustment, the average reduction in mortgage rates for existing home loans is around 0.5 percentage points.
• The move is expected to benefit 50 million households, or a population of 150 million, and reduce the total interest expenses for households by approximately 150 billion yuan ($21.05 billion) per year on average.

New Zealand October consumer confidence -4.1% m/m to 91.2 (prior 95.1)

• ANZ Roy Morgan Consumer Confidence

New Zealand ANZ Roy Morgan Consumer Confidence for October 2024 drops to 91.2

• prior 95.1
• fell 4 points in October following three months of improvement

Inflation expectations were unchanged at 3.8%:

Japan September PPI Services (Corporate Services Price Index) 2.6% y/y (expected 2.7%)

• Japan Services Producer Price Index (PPI)

Japan September 2024 PPI Services (Corporate Services Price Index) 2.6% y/y

• expected 2.7%, prior 2.7%

Tokyo area October inflation data: Headline 1.8% y/y (prior 2.2%)

• Tokyo CPI data leads the national result by about three weeks

Headline CPI 1.8% y/y, down from September

• expected 1.9%, prior 2.2%

Core 1.8% y/y, down from September

• expected 1.7%, prior 2.0%
• this is ex-food

Core-core 1.8% y/y, underlying inflation up from September

• expected 1.8%, prior 1.6%
• ex-food and energy

Japan’s economy minister says the weak yen has various impacts on the economy

• Japan Economy Minister Akazawa:

• Won’t comment on forex levels
• Important for currencies to move in stable manner reflecting fundamentals
• Weak yen has various impact on economy

Official Mimura says finance minister Kato met with US Treasury Secretary Yellen on Thursday

• Discussed recent FX moves – agreed to communicate closely on FX

Japan’s Finance Ministry’s Vice Finance Minister for International Affairs Atsushi Mimura

• finance minister Kato met US Treasury Secretary Yellen on Thursday
• Kato and Yellne discussed recent FX moves in their meeting
• Says Japan and the US agreed to communicate closely on FX
• desirable for FX moves to reflect fundamentals
• we will be increasingly vigilant to FX moves

Cryptocurrency News

Solana Faces Correction Despite Record On-Chain Activity

Solana Price Today: $170.37
Solana’s price has slipped nearly 4% to $170, indicating a correction even as the blockchain’s economic activity hits an all-time high for the fourth consecutive time.

On-Chain Metrics Rise

• According to data from Blockworks, Solana is experiencing a significant spike in on-chain activity, driven by increased demand for meme coins and developments related to the liquid staking protocol, Jito. Despite this rising activity, the price of SOL has not reflected these positive metrics.

Potential for Further Decline

• Analysts suggest that Solana could correct by over 5% if current losses continue, potentially dropping to the liquidity sweep level at $160.99, which aligns with the October 21 low and the lower boundary of the Fair Value Gap (FVG).
• Key support levels are anticipated in the imbalance zone between $156.65 and $157.58.

Technical Analysis

• The Relative Strength Index (RSI) stands at 61.45 and is trending downward, indicating underlying negative momentum and supporting a bearish outlook for Solana’s price action.

As market participants closely monitor the situation, the interplay between on-chain activity and price performance will be critical in determining Solana’s next moves.

Bitcoin falls after a report says the FBI is investigating Tether

• The WSJ reports that the FBI is investigating Tether and the Treasury Dept is considering sanctioning Tether

• DOJ and Treasury investigating Tether over potential sanctions violations and illicit activity
• Manhattan US attorneys leading criminal probe into possible links to drugs, terrorism, hacking
• Treasury mulling sanctions against world’s most traded crypto ($190B daily volume)
• Comes as Tether steps up compliance, recently froze 1,850 wallets worth $114M
• Investigation examining if stablecoin used to evade sanctions by Hamas, Russian arms dealers
• Tether strongly denies allegations, says working with law enforcement
• Cantor Fitzgerald manages $80B+ of Tether’s Treasury holdings
• Follows $4.3B Binance settlement and previous $61M regulatory fine

Bitcoin is down 2.5% to $66,450 today and is under pressure on this report.

Crypto Market Update: XRP, Bitcoin, and Ethereum Experience Declines Amid Ripple’s Legal Developments

XRP Price Today: $0.5248
XRP has dropped over 1.30% as Ripple’s Chief Legal Officer, Stuart Alderoty, confirmed the filing of Form C, a crucial document for the ongoing SEC appeals process.

Bitcoin Price Today: $67,800
Bitcoin is correcting less than 1%, maintaining a position above $67,500, having traded within a range of $70,080 to $49,000 since late July. The leading cryptocurrency remains less than 10% from its all-time high of $73,777.

Ethereum Price Today: $2,542
Ethereum is down nearly 0.20%, sustaining above the critical support level of $2,500. Spot Ethereum ETFs saw a net inflow of $2.3 million on Thursday, although there are no clear indicators of increasing institutional demand for Ether.

Market Highlights

• A Blockworks research dashboard noted that Solana’s network real economic value reached a new all-time high of $11 million, likely fueled by interest in meme coins.
• Bitcoin options worth $4.26 billion are set to expire on Friday, with BTC hovering around $68,000 ahead of the expiry.
• Among existing blockchains, Cosmos is highlighted as offering the highest yield of up to 18.50%, with approximately 248.8 million ATOM tokens staked.

Industry Insights

• SEC Commissioner Mark Uyeda discussed the U.S. regulatory landscape for cryptocurrencies at the AIMA APAC Annual Forum, noting the country’s struggle with unclear regulatory frameworks compared to countries like Japan, Singapore, Hong Kong, and Australia, which are fostering innovation.
• The Indian cryptocurrency exchange WazirX, which faced an exploit earlier this year, released a new proof of reserves report amid ongoing scrutiny.
• Arkham Intelligence reported that approximately $20.7 million worth of funds appear to have been stolen from U.S. government wallets.

As the legal developments surrounding Ripple unfold, market participants are watching closely for implications on XRP and broader market trends.

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