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Stocks and bonds chop on PMIs and Dollar unwinds Monday's losses - Newsquawk Asia-Pac Market Open

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Tuesday, Oct 24, 2023 - 09:04 PM
  • US stocks grinded higher throughout the morning despite disappointing EZ PMIs with highs seen shortly after the US open supported by stronger than expected the US PMI surveys.
  • Dollar was bid on Tuesday, more or less paring all of the Monday weakness with DXY hitting a high of 106.32 vs the Monday high of 106.33.
  • Treasuries were little changed in choppy trade Tuesday amid hot US survey data offsetting weak European figures; slightly soft 2yr auction demand. 
  • Oil prices took another tumble on Tuesday with desks pointing to the soft PMIs in Europe, the Dollar bounce, and optimism around the Middle Eas
  • Looking ahead, highlights include Australian CPI

 

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25th October 2023

  • Click here for the Newsquawk Week Ahead.

US TRADE

  • US stocks grinded higher throughout the morning despite disappointing EZ PMIs with highs seen shortly after the US open supported by stronger than expected the US PMI surveys.
  • SPX +0.73% at 4,247, NDX +0.97% at 14,745, DJIA +0.62% at 33,141, RUT +0.82% at 1,679
  • Click here for a detailed summary.

NOTABLE HEADLINES

  • Alphabet Inc (GOOGL) - Q3 2023 (USD): EPS 1.55 (exp. 1.45), Revenue 76.69bln (exp. 75.9bln), Revenue ex-TAC 64.05bln (exp. 63.04bln) KEY METRICS: Operating income 21.34bln (exp. 21.44bln). Google Services operating income 23.94bln (exp. 22.89bln). Google Cloud operating income 266mln (exp. 433.6mln). Operating margin 28% (exp. 28.1%). Click here for the full earnings. (Alphabet IR)
  • Microsoft Corp (MSFT) - Q1 2024 (USD): EPS 2.99 (exp. 2.65), Revenue 56.5bln (exp. 54.5bln). Cloud Revenue 31.8bln (exp. 31.19bln). Productivity Revenue 18.59bln (exp. 18.29bln). Returned USD 9.1bln to holder. Dynamics products and cloud services revenue increased 22%. Click here for the full earnings. (Microsoft IR)
  • GOP Representative Tom Emmer has dropped out of the race for House speaker, according to Punchbowl.

DATA RECAP

  • US Rich Fed Comp. Index* (Oct) 3.0 (Prev. 5.0)
  • US Rich Fed, Services Index* (Oct) -11.0 (Prev. 4.0)
  • US Rich Fed Mfg Shipments* (Oct) 9.0 (Prev. 7.0)
  • US Redbook YY w/e 5.0% (Prev. 4.6%)
  • S&P Global Manufacturing PMI Flash (Oct) 50.0 vs. Exp. 49.5 (Prev. 49.8)]#
  • US S&P Global Services PMI Flash (Oct) 50.9 vs. Exp. 49.9 (Prev. 50.1)
  • US S&P Global Composite Flash PMI (Oct) 51.0 (Prev. 50.2)

FX

  • The Dollar was bid on Tuesday, more or less paring all of the Monday weakness with DXY hitting a high of 106.32 vs the Monday high of 106.33, a level the Dollar Index resides around heading into APAC trade.
  • the Euro sold off in wake of the weak PMI data where EUR/USD fell from highs of 1.0693 in the morning to lows of 1.0583 with the move also led by yield differentials between the US and EZ.
  • The Yen saw two way price action in the European morning on reports the BoJ is said to see little need to change forward guidance, and it is considering whether to tweak YCC given US yield concerns, according to Bloomberg.
  • Cyclical currencies were mixed, AUD was the relative outperformer, even outperforming the Buck after commentary from RBA's Bullock this morning who said the board will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation, somewhat eerie commentary ahead of the inflation report due tonight.
  • NZD was flat vs the firmer buck, being supported somewhat by Aussie tailwinds but not to the same extent with AUD/NZD rising above 1.0850.
  • CAD also saw weakness vs the Dollar but not to the same extent as GBP with lower oil prices weighing on CAD ahead of the BoC rate decision on Wednesday.

FIXED INCOME

  • Treasuries were little changed in choppy trade Tuesday amid hot US survey data offsetting weak European figures; slightly soft 2yr auction demand.

COMMODITIES

  • Oil prices took another tumble on Tuesday with desks pointing to the soft PMIs in Europe, the Dollar bounce, and optimism around the Middle East.
  • Saudi Energy Minister said Saudis would not boost oil capacity to 13mln BPD without demand, less volatile oil market is to help the world grow, says the oil market strategy is working, according to Reuters.
  • Iraq PM Sudani said foreign oil companies operating in the Kurdish region informed us that if an agreement is reached on oil production costs and contracts, they will resume oil production within a month, according to Reuters.
  • US Energy Inventory Data (bbls): Crude -2.7mln (exp. +0.2mln), Gasoline -4.2mln (exp. -0.9mln), Distillate -2.3mln (exp. -1.2mln), Cushing +0.5mln.

GEOPOLITICAL

  • White House Defense Spokesman Kirby said National Security Adviser Sullivan will have meetings later this week with China's Wang Yi, according to Reuters.
  • Israel is willing to delay its ground invasion of Gaza by a few days to allow for talks on releasing a large number of hostages that Hamas is holding, via Axios citing officials.
  • Israel said two projectiles were launched from Syria, Israel is responding with artillery fire, according to the IDF.
  • Qatar mediators are urging Hamas to quicken the pace of hostage releases to include women and children held in Gaza and to do so without expecting Israeli concessions, according to Reuters citing diplomats and source in the region; Qatar, in coordination with the US, is leading mediation talks with Hamas and Israel over the release of more than 200 hostages captured on October 7th. Talks progressing over the release of a larger amount of prisoners (vs the two released on Monday).
  • Rocket attack targeted Iraq's Ain Al-Asad airbase, which hosts US and other international forces, West of Baghdad, according to Reuters sources.
  • Hezbollah said it strikes Israeli post with guided missiles, according to Reuters.
  • US military is hiking measures to protect US troops in Middle East as concerns grow about attacks, according to a US official cited by Reuters. New US force protection measures in Middle East include boosting patrols, limiting access to US facilities and hiking intel collection. US is leaving open the possibility of evacuations of military families if needed, according to Reuters.

CRYPTO

  • Barrons' Joe Light tweets "with today's update, now the iShares Bitcoin Trust IBTC is gone from DTCC's list".

ASIA-PAC

NOTABLE HEADLINES

  • Japanese PM Kishida said it is desirable to FX move stably when questioned about the JPY's fall near 150 vs. the USD. Important for the government and BoJ to work together closely to achieve wage growth and stable prices. Government will strive to pull Japan permanently out of deflation, expects the BoJ to guide policy appropriately based on this understanding, according to Reuters.

EU/UK

NOTABLE HEADLINES

  • ECB's Lagarde told EU officials in a call on Monday that fight against inflation is going well; said EZ economy to stagnate and face downside dangers in the next few quarters though risks to prices have become more balanced, according to Bloomberg sources. Said to lawmakers that employment is holding up, but is showing signs of weakening. Said markets tend to instantly react to European divisions over the Middle East or other such stances. Said spreads between different countries will be wider if the bloc doesn’t coalesce more. Complained that not having an agreement on how to interpret EU’s Stability and Growth Pact before January, when the rule limiting deficits to 3% of output is reinstated, is a problem as it risks putting pressure on monetary policy to do more.
  • Hungarian O/N Deposit Rate (Oct) 11.25% vs. Exp. 11.5% (Prev. 12.0%).
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