North American News
US Stock Markets Shift in Divergent Directions: S&P and NASDAQ Retreat from Early Gains
The US stock market experienced a mixed close on Thursday, with the S&P 500 and NASDAQ giving up earlier gains, while the Dow Jones Industrial Average managed to end the day higher.
Market Performance:
- Dow Jones Industrial Average: +161.35 points (+0.37%) at 43,239.05
- S&P 500 Index: -1.00 points (-0.02%) at 5,841.46
- NASDAQ Index: +6.53 points (+0.04%) at 18,373.61
- Russell 2000 Index: -5.82 points (-0.25%) at 2,280.85
Earlier in the session, the S&P was up by 35.99 points, while the NASDAQ reached a high of 174.38 points, reflecting the volatility of the trading day.
After-Hours Earnings Reports: Post-market, notable companies reported better-than-expected earnings, influencing their stock movements:
- Netflix Inc (NFLX) Q3 2024 Results:
- EPS: $5.40 (Expected: $5.12) — BEAT
- Revenue: $9.82 billion (Expected: $9.76 billion) — BEAT
- Q4 Guidance:
- Revenue: $10.13 billion (BEAT expectations of $10.05 billion)
- EPS: $4.23 (BEAT expectations of $3.90)
- Operating Margin: 22% (MET expectations of 21.2%)
- FY25 Guidance: Revenue: $43-44 billion (MET expectations of $43.4 billion)
- Operating Margin: 28% (MET expectations of 27.9%)
- Shares: Up $34.85 (+5.10%) at $722.90
- Intuitive Surgical Inc (ISRG) Q3 2024 Results:
- EPS: $1.84 (Expected: $1.64) — BEAT
- Revenue: $2.04 billion (Expected: $2.01 billion) — BEAT
- Shares: Up $33.27 (+7.02%) at $507
Despite the strong performances from these tech giants, broader market sentiment remained cautious, leading to a mixed close overall.
US September retail sales control group +0.7% vs +0.3% expected
- US September 2024 data on retail sales from the Census Bureau
- Prior control group was +0.3%
- Headline retail sales +0.4% versus +0.3% expected
- Retail sales $714.4 billion versus $711.3 billion prior
- Prior m/m sales +0.1%
- Retail sales y/y +1.7% versus +2.2% prior
- Ex autos +0.5% versus +0.1% expected
- Prior ex autos +0.1% prior (revised to +0.2%)
- Ex autos and gas +0.7% versus +0.3% prior
Atlanta Fed Q3 GDPNow 3.4% vs 3.2% prior
- Atlanta Fed GDPNow ticks up as we get closer to Q3 GDP
In their own words:
After recent releases from the US Census Bureau, the US Bureau of Labor Statistics, and the Federal Reserve Board of Governors, the nowcast of third-quarter real personal consumption expenditures growth increased from 3.3 percent to 3.6 percent, while the nowcast of third-quarter real gross private domestic investment growth decreased from 3.3 percent to 3.1 percent.
US initial jobless claims 241K vs 260K estimate
- The weekly US initial and continuing claims data
- Prior week 258K revised to 260K
- Initial jobless claims 241K vs 260K est
- 4-week moving average initial jobless claims 236.25K vs 231.5K prior
- Continuing Claims 1.867M vs 1.865M estimate.
- Prior week of continuing claims revised to 1.858M versus 1.861M previously reported
- 4 week moving average of continuing claims 1.843M vs 1.831M prior week (revised)
Looking at the largest increases and decreases. There was a jump in North Carolina and Florida that was likely hurricane related. Overall with the decline in initial jobless claims for the week, it continues to paint a solid picture in the employment market
- The largest increases in initial claims for the week ending October 5 were in Michigan (+9,389), North Carolina (+8,714), Ohio (+4,648), California (+4,068), and Florida (+4,021),
- The largest decreases were in Wyoming (-24), Idaho (-21), Louisiana (-13), Massachusetts (-12), and Alaska (-10).
US September Industrial production -0.3% versus -0.2% expected
- US September 2024 industrial production and capacity utilization
- Prior month +0.8% revised to 0.3%
- industrial production for September -0.3% vs -0.2% expected
- Capacity utilization 77.5% versus 77.8% estimate.
- Prior month capacity utilization 78.0% revised to 77.8%
- Manufacturing output -0.4% vs -0.1% expected
- Prior manufacturing output +0.9% revised to 0.5%
Other details
- For the third quarter as a whole, industrial production declined at an annual rate of 0.6 percent.
- Manufacturing output moved down 0.4 percent in September, and the index for mining fell 0.6 percent.
- The index for utilities gained 0.7 percent.
- At 102.6 percent of its 2017 average, total industrial production in September was 0.6 percent below its year-earlier level.
- Capacity utilization edged down to 77.5 percent in September, a rate that is 2.2 percentage points below its long-run (1972–2023) average
US October NAHB home builder sentiment 43 vs 42 expected
- Home builder sentiment from the National Association of Home Builders for August 2024
- Prior was 41
- Current sales 47 vs 45 prior
- Prospective sales 29 vs 27 prior
- Home sales over the next six months 57 vs 53 prior
US August business inventories 0.3% vs 0.3% expected
- US August 2024 business and retail inventories details
- Prior month business inventories 0.4%
- Prior month retail inventories ex auto 0.5%
- Business inventories for August 0.3% versus 0.3% expected
- Retail inventories ex autos 0.5% versus 0.5% last month
Sales: The combined value of distributive trade sales and manufacturers’ shipments for August, adjusted for seasonal and trading day differences but not for price changes, was estimated at $1,876.8 billion, down 0.2 percent (±0.2 percent)* from July 2024, but was up 1.3 percent (±0.3 percent) from August 2023
Inventory/sales: The total business inventories/sales ratio based on seasonally adjusted data at the end of August was 1.38. The August 2023 ratio was 1.36.
October Philly Fed manufacturing index +10.3 vs +3.0 expected
- Highlights of the Philly Fed business survey
- Prior was +1.7
- New orders: 14.2 vs -1.5 prior
- Shipments: 7.4 vs -14.3 prior
- Unfilled orders: -1.5 vs -6.7 prior
- Delivery times: 10.2 vs -0.7 prior
- Inventories: 0.5 vs +5.0 prior
- Prices paid: 29.7 vs +34.0 prior
- Prices received: 17.9 vs +24.6 prior
- Employment: -2.2 vs +10.7 prior
- Average workweek: -11.8 vs -13.6 prior
- Six month index +36.7 vs +15.8 prior
US must have healthy relationship with China based on level playing field – Yellen
- Remarks by US Treasury secretary, Janet Yellen
- Sweeping, untargeted tariffs would raise prices for US households
- There is a growing international consensus that China must shift its economic practices
- China policies are leading to industrial overcapacity, threatening US firms and workers
Reuters Poll: BOC to cut overnight rate by 50 basis points on Oct 23
- 19 of 29 economist see a 50 bp cut. 10 see 25 bps
A Reuters poll is showing:
- 19 of 29 economists see the Bank of Canada cut rates by 50 basis points to 3.75% at their October 23 meeting
- 10 of 29 economists see a 25 basis point cut to 4.0%
By the end of 2024:
- 10 of 29 economists see the rate at 3.5%
- 9 of 29 see 3.75%,
- 9 of 29 see 3.25% and
- 1 of 29 see 4.0%
Commodities
Gold Hits Record High Amid US Election Uncertainty
Gold surged to $2,691 on Thursday, propelled by mounting uncertainty surrounding the upcoming US elections, despite stronger-than-expected retail sales and job data. The yellow metal has encountered resistance at the $2,700 mark but remains up by over 0.66%.
Market Performance and Economic Data: During the North American session, gold reached a record high, yet it struggled to breach the crucial $2,700 threshold due to the persistent election uncertainties. Despite the robust economic data indicating a resilient US economy, these factors have not diminished gold’s appeal as a safe haven asset. The US Department of Commerce reported a 0.4% increase in retail sales for September, surpassing estimates of 0.3% and significantly higher than August’s 0.1% rise. Additionally, initial jobless claims fell to 241,000, down from 258,000 the previous week and below expectations.
The US Dollar Index (DXY), which measures the dollar against a basket of six currencies, increased by over 0.26% to 103.79, reaching its highest level in nearly two months. In contrast, gold prices dipped to $2,672 before recovering some ground, defying the broader strength of the dollar.
Federal Reserve Outlook: Following the economic data, traders adjusted their expectations regarding the Federal Reserve’s monetary policy. The odds of a 25 basis points (bps) rate cut in November fell from 94% to 88.2%, while the probability of maintaining the current rate stands at 11.8%. The Atlanta Fed’s GDP Now forecast for US Gross Domestic Product (GDP) growth was revised upward to 3.4%, up from 3.2% on October 9.
“On top of the concerns in the Middle East, you are also nearing the US election, which is looking like a very closely contested election. And that generates a whole host of uncertainty, and Gold often is the place to go in times of uncertainty,” remarked Niteh Shah, a strategist at WisdomTree.
Daily Digest Market Movers:
- US Retail Sales for September rose by 0.4% (MoM), exceeding estimates of 0.3%.
- Initial Jobless Claims for the week ending October 12 came in at 241K, below estimates.
- US Industrial Production contracted by -0.3% MoM in September, a reversal from 0.3% growth.
- According to the Chicago Board of Trade, investors are estimating 48 basis points of Fed easing by the end of the year.
Platinum: Few pockets of risk on the radar – TDS
Platinum prices have been trading strong, but we now see the most extremely asymmetric set-up in algo flows across our global macro radar, TDS’ FFX analysts Daniel Ghali notes.
Window for selling activity opens next week
“The window for large-scale selling activity will be open at the start of next week, and a large downtape could see CTAs sell a massive -50% of their max size over the following sessions. Conversely, a commensurate uptape won’t lead to notable buying activity.”
“This set-up strongly favors continued downside over the coming week.”
EIA weekly crude oil inventories -2191K vs +1835K expected
- Highlights of the weekly US oil report from the EIA
- Crude oil inventories -2191K vs +1835K exp
- Gasoline inventories -2201K vs -1471K exp
- Distillates inventories -3543K vs -2181K exp
- Refinery utilization +1.0% versus expectations of -0.6%
EU News
European equity close: Stocks cheer the ECB rate cut
- Closing changes in the major European exchanges
- Stoxx 600 +0.7%
- German DAX +0.7%
- France CAC +1.3%
- UK FTSE 100 +0.7%
- Spain IBEX -0.7%
- Italy’s FTSE MIB +1.0%
Eurozone September final CPI +1.7% vs +1.8% y/y prelim
- Latest data released by Eurostat – 17 October 2024
- Prior +2.2%
- Core CPI +2.7% vs +2.7% y/y prelim
- Prior +2.8%
Eurozone August trade balance €4.6 billion vs €21.2 billion prior
- Latest data released by Eurostat – 17 October 2024
- Prior €21.2 billion
Here is the breakdown by the EU’s main trade partners, denoted in billion euros compared to the previous year:
Switzerland September trade balance CHF 4.95 billion vs CHF 4.58 billion prior
- Latest data released by the Federal Statistics Office – 17 October 2024
- Prior CHF 4.58 billion; revised to CHF 4.74 billion
The Swiss trade surplus grew slightly in September with the breakdown as per below:
ECB’s Lagarde: Economic activity has been somewhat weaker than expected
- Lagarde in Ljubljana
- The disinflationary process is well on track
- Manufacturing has continued to contract
- Services activity showed an uptick in August but latest data is more sluggish
- Business are increasing investment slowly
- Housing investment continues to fall
- Savings rate is well above the pre-pandemic period (about 3 percentage points)
- Labor market remains resilient
- We expect the economy to strengthen over time
- Exports should contribute to the recovery
- Wage pressures in the eurozone remain strong
- Inflation is expected to rise in the coming months, in part due to energy base effects
- Inflation should then decline to target in 2025
- Risks to growth tilted to the downside
- We are not pre-committing to a particular rate path
Lagarde Q&A: All the data is headed in the same direction
- Comments in response to questions from reporters
- The disinflation process is well on track
- This decision is an example of data dependence
- Economic activity has come in below what we anticipated
- December will be another opportunity to put the information in our model
- What was debated was 25 basis points, end of story (not 50 bps)
- Decision to cut 25 bps was unanimous
- I didn’t open the door to anything
- Probably more downside risks to inflation than upside risks
- We are still looking at a soft landing, we certainly do not see a recession
- We are concerned about growth
- Inflation is definitely on the disinflationary track
- We were all surprised by the acceleration lower in inflation data
- We haven’t broken the neck of inflation but we’re in that process
ECB cuts key rates by 25 bps in October monetary policy decision, as expected
- ECB announces their latest monetary policy decision – 17 October 2024
- Deposit facility rate 3.25% vs 3.25% expected
- Prior 3.50%
- Main refinancing rate 3.40% vs 3.40% expected
- Prior 3.65%
- Marginal lending facility 3.65%
- Prior 3.90%
- Incoming information shows that the disinflationary process is well on track
- The inflation outlook is also affected by recent downside surprises in indicators of economic activity
- Inflation is expected to rise in the coming months, before declining to target in the course of next year
- Will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction
- It will be based on the assessment of the inflation outlook, incoming economic and financial data
- Not pre-committing to a particular rate path
ECB sources: Policymakers expect to cut in December unless data shows marked turnaround
- ECB sources leak to Reuters
Policymakers expect to cut in December unless there is an economic turnaround, according to Reuters sources.
ECB sticks to data-driven approach – Westpac
- Westpac reviews the ECB decision
The ECB delivered the widely anticipated 25bp rate cut today, with President Lagarde sticking to her guns on a meeting-by-meeting approach. Despite the ECB’s “no preset path” mantra, markets are already betting on another cut in December and a 22% chance they lower rates by 50 bps.
Westpac highlights how Lagarde adopts the stance of answering questions with a message that she and the ECB wish to convey rather than actually respond directly to the questions.
“During Lagarde’s Press Conference, markets became more confident in pushing yields lower with EUR remaining heavy,” Westpac writes.
“The ECB remains determined to ensure that inflation returns to their 2% target on a medium-term basis, keeping policy restrictive in order to so, in relation to their meeting-by-meeting data dependency whilst also avoiding any commitment to a pre-set path, another aspect repeatedly stressed by Lagarde.”
UK services inflation slowing more quickly, looks set to carry on, BoE to cut harder
- HSBC on the UK inflation data and Bank of England (& GBP) implications
- Reaffirming stronger odds for the BOE to cut rates in November. GBP/USD falls
HSBC’s report says GBP could extend lower in the months ahead if U.K. services inflation eases further,
Analysts at the bank noted services inflation is slowing more quickly, and might fall further in coming months. This will ease concerns about persistent inflation at the Bank of England and its Monetary Policy Committee to interest rates more quickly.
- Traders are already expecting a November rate cut and see the chance of another cut in December
- “The BOE’s end point is still priced at a relatively high level of 3.51% and remains 76bp above the HSBC forecast”
Asia-Pacific-World News
China says it has invited EU technical team over for next phase of EV negotiations
- For some context, the EU pressed ahead with Chinese EV tariffs earlier this month despite opposition from Germany
The tariffs imposed means that EVs built in China will see 45% duties, which will go into effect next month for five years. The vote went through with ten members backing it while five opposed, alongside twelve abstentions. Of those who opposed, the standout of course is Germany.
PBOC sets USD/ CNY reference rate for today at 7.1220 (vs. estimate at 7.1208)
- PBOC CNY reference rate setting for the trading session ahead
In open market operations (OMOs):
- PBOC injects 133bn yuan via 7-day RR, sets rate at 1.5%
- 150bn mature today in OMOs
- net drain 17bn
People’s Bank of China dep. governor says rate cut applies to 90% of existing mortgages
- Real estate development loans will be extended until end of 2026
People’s Bank of China dep. governor:
On existing mortgage rate cuts:
- most stock of existing mortgage loans interest rates will be adjusted October 25
- Accounts for 90% of existing mortgages
On lowering minimum down payment ratios:
- Have observed market confidence and sales as a result
On real estate development loans:
- Will be extended until end of 2026
China’s housing minister says will add 1 mn village urbanization projects
- Starting to sound like more substantial efforts
China’s housing minister
- will add 1 mn village urbanization projects
- will expand white list of projects, bank lending to 4tln yuan
- will adopt monetisation measures for urbanisation projects
Other officials speaking also:
- All commercial housing loans to be included on white list
- management of real estate projects will be further standardised
- financing to be quicker, more convenient
- Commercial banks should make full use of loans
- Should optimise allocation of loans, method of appropriation
- Banks should ensure loans are granted for white list projects
- Banks should ensure loans are granted for white list projects
- Since October 16 white list approved loans hit 2.23 trln yuan
- Cities to make their own decisions on property restrictions based on economic situation and local property market conditions
- Cities will take steps according to own situation to prevent negative effects of a migratory siphon effect
Australian September unemployment rate 4.1% (vs. 4.2% expected)
- Employment report from Australia for September 2024
The latest from the Australian Bureau of Statistics for the Labour Force report, September 2024.
Employment +64.1k
- expected +25.0k, prior +47.5k
Unemployment Rate 4.1%
- expected 4.2%, prior 4.2%
Participation Rate 67.2%
- expected 67.1%, prior 67.1%
Full Time Employment +51.6k
- prior -3.1k
Japan data: September exports -1.7% y/y (expected +0.5%) & imports +2.1% (expected +3.2%)
- Japan trade data misses estimates
Exports to:
- China -7.3% y/y
- the EU -9% y/y
- the US -2.4% y/y
Singapore’s September exports rise 2.7% y/y (vs. 9.3% expected)
- Singapore’s non-oil domestic exports (NODX) , September 2024
Singapore non-oil domestic exports +2.7% in September y/y
- expected +9.3%, prior +10.7%
for the m/m +1.1%
- expected +4.9%, prior -4.7%
Exports to the European Union, Indonesia and South Korea rose strongly. Those to the US, Japan and Hong Kong fell.
Cryptocurrency News
Ethereum Bulls Gain Momentum as Price Stabilizes Above $2,600
Ethereum’s price remains stable above $2,600 on Thursday, having found support around the 50-day EMA after a brief period of volatility. The recent uptick in transaction fees collected on the network indicates a rise in network usage, while ETH staking has reached an all-time high in Q3, suggesting that more holders are actively seeking yield.
Signs of Optimism for Ethereum: A joint report from Coinbase Institutional and Glassnode, published on Wednesday, sheds light on several encouraging trends for Ethereum. The report notes that Ethereum has reclaimed a significant portion of fees among fee-earning layer-1 (L1) blockchains, jumping from a low of 9% in late August to a peak of 40% in late September. This rebound reflects increased utilization of the Ethereum network.
Moreover, analysts observed a rebound in US spot Ethereum Exchange Traded Fund (ETF) flows towards the end of Q3, following several weeks of outflows, indicating a potential recovery in institutional demand for ETH.
Additionally, the number of Ethereum staked has surged to a new all-time high during the third quarter, demonstrating that many holders are looking to earn yield on their investments. The report concludes with a notable observation: as Ether’s price has decreased, market sentiment has shifted from greed to fear, potentially setting the stage for a forthcoming rally.
With these developments, Ethereum bulls appear to be gaining strength, signaling positive momentum ahead.
Crypto Today: Bitcoin Dominance Peaks as BTC and Ethereum Hold Steady, XRP Sees Gains
Bitcoin dominance surged to 58.85% on Thursday, marking its highest level since April 2021, while Bitcoin (BTC) and Ethereum (ETH) maintain stability above $67,000 and $2,600, respectively. XRP also posted gains, trading above $0.5500.
Bitcoin, Ethereum, and XRP Updates: Bitcoin remains resilient above $67,000, showing minimal fluctuation with less than a 1% drop on the day. Following four consecutive days of positive flows, Bitcoin Spot Exchange Traded Funds (ETFs) have seen a resurgence in institutional demand. The climb in Bitcoin’s dominance suggests a potential capital inflow into BTC, often at the expense of altcoins, indicating waning interest in alternative cryptocurrencies.
Ethereum trades at $2,617, with co-founder Vitalik Buterin discussing future possibilities for the Ethereum protocol on X. Buterin highlighted the role of Layer 2 chains and Ethereum’s potential as a foundational blockchain in its development. Meanwhile, XRP has gained over 1%, now trading at $0.5530. Traders are currently processing recent confusion surrounding the appeals deadline in the SEC lawsuit against Ripple.
Market Updates: Ethereum’s blockchain aims for 100,000 Transactions Per Second (TPS) through a newly outlined plan for its future. Buterin detailed “the surge,” a developmental phase intended to scale Ethereum’s transaction capacity significantly from the current 12-15 TPS.
South Korea’s largest exchange, Upbit, has announced the listing of Injective in both the Korean Won (KRW) and USD Tether (USDT) markets. Additionally, Coinbase has integrated the ZetaChain mainnet as a default network, allowing users to stake and earn rewards in ZETA.
Industry Updates: In the realm of politics, Polymarket has raised former US President Donald Trump’s chances of winning the upcoming presidential elections to 59.9%. This is notable as Trump has shown interest in supporting Bitcoin and cryptocurrency, promising a favorable stance at his political events. Meanwhile, Thailand’s Siam Commercial Bank (SCB) becomes the fourth largest financial institution in the country to offer stablecoin-based cross-border payments and remittances.
According to a16z’s state of the crypto report, as of September 2024, there are approximately 617 million cryptocurrency holders globally, with 60 million active users each month. The report highlights that stablecoin transaction volume in Q2 2024 exceeded that of Visa by more than twofold.
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