Eventful week, oil price drop, corporate and geopolitical news
Stock market news
• With Japan's election sending the yen to a three-month low, a busy US earnings calendar, the UK budget and the fast-approaching US election making for an eventful week.
• The yen fell and Japanese stocks rose after Japan's ruling coalition lost its parliamentary majority in elections over the weekend, raising the specter of protracted political wrangling and more fiscal stimulus.
Markets are also betting the policy will make the job of the Bank of Japan more difficult as policy normalization is already complicated by a fragile economy and volatile markets. It is expected to stand firm at its meeting ending on Thursday.
• Britain's new Labour government delivered its first budget on Wednesday, with investors already selling off British shares and government bonds ahead of its publication, unsure how Chancellor Rachel Reeves will balance high debt levels, public spending commitments and a pledge not to raise income tax.
• Peak earnings season on Wall Street. This week will be the busiest of the quarter, with more than 150 S&P 500 companies set to report third-quarter results. Five of the “magnificent seven” U.S. titans report: Google parent Alphabet on Oct. 29, Microsoft and Facebook parent Meta Platforms on Oct. 30, and Apple and Amazon on Oct. 31.
• The market-moving events continue next week, with the U.S. election on November 5 and the Fed's next monetary policy decision on November 7, which could further spook investors in the coming days. The U.S. jobs report on November 1 is also important for investors debating whether a stronger-than-expected economy could lead to the Fed cutting interest rates less than has already been priced in.
• Oil prices are expected to fall when trading resumes on Monday after Israel's retaliatory strike on Iran over the weekend bypassed Tehran's oil and nuclear infrastructure and did not disrupt energy supplies, analysts said.
• China's industrial profits continue to fall as deflation takes its toll. Profits fell at a faster pace than a month earlier as deflationary pressures undermine the soundness of corporate finances.
• Microsoft to consider investing in bitcoin in December despite board opposition. The board said it had already weighed investing in bitcoin and did not recommend a vote in December.
• Number of Bitcoin whales hits highest since January 2021 The number of Bitcoin whales holding at least 1,000 BTC rose to 1,678 earlier this week.
• OpenAI's Whisper transcription tool has problems with 'hallucinations,' researchers say. Experts have serious concerns about OpenAI's Whisper transcriptions - AP
• Bank of England to push ahead with digital currency if banks fail The Bank of England is reluctant to push ahead with a digital currency available to the general public because commercial banks risk being left behind by less-regulated tech companies, Chairman Andrew Bailey said on Saturday.
• Boeing may sell its space company as part of business optimization and cost reduction, WSJ has learned. This division of the corporation is jointly creating the Starliner spacecraft for flights to the ISS with NASA.
However, so far it has only generated losses - more than $3 billion in the first half of the year alone.
• Wealthy collectors spent an average of 32% less on art and antiques in 2023, with average collector spending falling from $533,000 in 2022 to $364,000 in 2023, according to the report. In her study, Claire McAndrew finds that the drop in average collector spending on art is due to the purchasing behavior of millions of people aged 28 to 43.
• Italian companies Eni and BP have resumed onshore drilling in Libya after a 10-year hiatus, Libya's National Oil Corporation (NOC) said.
• TSMC halts shipments to Chinese firm after chip found in Huawei processor - Reuters Stimulus matters more than US election for Chinese stocks - Bloomberg
Investors accustomed to the years-long Sino-US trade dispute appear willing to take on the risk of even higher tariffs after the US presidential election and favor Chinese assets, betting on more stimulus.
• Alibaba to pay $433.5 million to settle shareholder lawsuit over monopoly claims. Alibaba denies wrongdoing, saying it settled to avoid the expense and disruption of further litigation.
• Delta (DAL) is suing CrowdStrike (CRWD) over a July outage, alleging gross negligence on the part of the cybersecurity firm. CrowdStrike said Delta is trying to shift blame because of outdated systems.
• Sunrun (RUN) is in talks to supply solar power to data centers.
• Markets will be impacted this week by:
- the Federal Reserve's desired inflation index,
- the October employment report,
- and earnings from major tech companies Alphabet (GOOGL), Apple (AAPL), Amazon (AMZN), Microsoft (MSFT) and Meta (META), which will determine the direction of markets in early November.
Also on the calendar are third-quarter economic growth data, job openings, service sector and manufacturing activity, and consumer confidence.
The calendar is very busy this week.
• Monday will not bring big economic data, but next week will see the release of third-quarter GDP and inflation data for the eurozone, which could confirm the European Central Bank's dovish stance.
Key events that could impact markets on Monday:
SPEAKERS: ECB Vice President Luis de Guindos speaks in Madrid.
EARNINGS: Koninklijke Philips NV < PHG.AS >.
Fundamental news
• Israeli strike cripples Iran's missile production, knocking out a critical component of Iran's ballistic missile program. Restoration could take at least a year, Axios reported. Israel also reportedly damaged Iran's drone production facilities.
• The Georgian Dream government party wins the parliamentary elections in Georgia. It allegedly received 54.23% of the votes, with 99.3% of the votes counted. The opposition refuses to recognize the election results and has announced protests.
Georgian President Zurabishvili refused to recognize the results of the parliamentary elections, called the current government illegitimate, and announced an opposition rally for tomorrow. "Belarusification of Georgia": Western politicians call on the EU not to recognize the results of the parliamentary elections in the country
The heads of the parliamentary committees on foreign affairs from Germany, Lithuania, Latvia, Ukraine, and Canada, as well as international policy experts from Poland, Italy, and Sweden, issued a joint statement calling on the European Union not to recognize the results of the parliamentary elections in Georgia, which were "neither free nor fair."
• Moldova has joined the sanctions against the Russian Federation. The President of the Republic explained this by the fear that otherwise the banking system and economic sectors of the state would be subject to isolation at the international level.
• Japan's ruling bloc reportedly loses majority in lower house, creating uncertainty
Japan's ruling Liberal Democratic Party (LDP) failed to win a majority in parliamentary elections for the first time since 2009.
However, Prime Minister Ishiba's LDP remains the main party in Japan's parliament and no change in government is expected.
• As the election approaches, Trump's threats against political opponents are intensifying. Former administration officials warn of "dictatorial" plans if the politician wins - The New York Times.
In China, law enforcement officials have held 589,000 people accountable since the beginning of this year as part of a major anti-corruption campaign. In total, from January to September 2024, oversight agencies in China received 2.7 million reports of illegal activities by officials, including 756,000 complaints.
• There are many paramilitary groups operating in the Middle East, the number of which varies depending on the current political situation and the presence of regional conflicts. These groups are most active in Iraq, Syria, Lebanon, Palestine, Yemen and Afghanistan. In total, there are about 60-100 significant formations with about 350 thousand people.
• Taliban Minister of Virtue Khalid Hanafi has banned women from speaking in public not only to men but also to women - Bil
Adult women are prohibited from allowing other adult women to hear their voices. Thus, women should also refrain from reciting the Quran out loud in the presence of other women.
• Beyoncé and DiCaprio urge vote for Harris.
• Chinese hackers used telecommunications access to gain access to Trump and Vance's phones. The FBI and the U.S. Cybersecurity and Infrastructure Security Agency accused Chinese hackers of breaking into U.S. telecommunications infrastructure and possibly gaining access to phones and data of a number of individuals.
The same day, the New York Times reported that presidential and vice presidential candidates Donald Trump and James Vance were among those whose phone numbers were hacked by Chinese hackers who had access to U.S. telecommunications networks.
• The German Ministry of Defense has expressed its intention to purchase 600 modern Taurus Neo cruise missiles, investing about $2.3 billion in the project. Plans call for funding from the 2025 budget and the first delivery by 2029, as well as possible integration of the missile with Eurofighters after the decommissioning of Tornado aircraft. Earlier, it was reported that Taurus missiles cost $1 million each. The Neo modification will cost almost $4 million. Inflation, however.
• India and China have begun pulling back from the Line of Actual Control (LAC) in the Depsang and Demchok areas of the Himalayas - The Times of India. Troops from both sides are to retreat to positions they held before April 2020. This was part of an agreement to jointly patrol the disputed Himalayan border, which saw the first clash between Indian and Chinese troops since 1975 in the Galwan Valley in 2020, resulting in casualties on both sides.
• Iceland officially switches to a four-day working week - thanks to the experiment, it has become one of the most dynamic economies in Europe. From 2020 to 2021, 51% of the population switched to a four-day week without changing wages. This led to economic growth, and the unemployment rate became one of the lowest in Europe.
• Taiwan wants to join the IMF to gain financial protection from China. Taiwan, a large economy the size of Poland, is absent from global organizations.
• The Washington Post has said it will not endorse Harris for president. The Post has supported Democratic candidates since 1960. Editor-in-Chief Robert Kagan (Victoria Nuland's husband) quit in response. The Post is owned by Jeff Bezos (yes, the one from Amazon). "The decision not to publish [the letter of support for Harris] was made by the Post's owner, Amazon founder Jeff Bezos." The Los Angeles Times had previously similarly declined to endorse Harris.
• Construction of the “largest building” in the world, The Mukaab, will begin in Riyadh (Saudi Arabia). The cost is $50 billion. The building will accommodate 20 Empire State Buildings. The height of the complex will be 396 meters, the width - 365 meters. Inside there will be 104 thousand residential premises + 9 thousand hotel rooms, offices and retail space. Completion of construction by 2030.