Technical correction of stock markets, euro fall and dollar rise, company news and politics
Stock market news
• European markets will be focused on a series of preliminary purchasing managers' index (PMI) data on Thursday, particularly from the eurozone, where the growth outlook has become a source of concern for investors and policymakers. Business activity in the bloc is expected to remain in negative territory this month, putting pressure on the European Central Bank (ECB) to deliver another interest rate cut sooner rather than later.
• The U.S. stock market suffered a correction yesterday without any clear news - it just got too high. Attack stocks led by the Magnificent Seven and semiconductors led the decline. Real estate and utilities stocks rose. The Nasdaq rose 0.6% this morning after a strong report from TSLA. The yield on 10-year U.S. Treasuries stabilized just below 4.25%.
• ECB President Christine Lagarde said on Wednesday the central bank should be cautious about deciding on further easing and be guided by incoming data, although sources told Reuters policymakers were already starting to discuss whether rates should fall below the neutral level to stimulate the economy. Futures prices show traders now expect rates to fall below 2% by June next year. All this has weighed on the euro, which is down more than 3% so far this month and on track for its sharpest monthly drop since April 2022. The single currency struggled to gain momentum on Thursday, hovering near its lowest since early July.
• Earlier this week, the International Monetary Fund said the U.S. economy would continue to be the main driver of global growth through the end of this year and into 2025, adding to bullish bets on the dollar. The U.S. currency has been further supported by uncertainty over the upcoming U.S. election and growing market bets on a possible victory for Republican presidential nominee Donald Trump.
• Bears are also starting to circle the Chinese yuan, which is likely to feel the impact of higher trade tariffs if Trump wins.
• Workers at a Boeing plant voted Wednesday to reject a contract offer and continue a more than five-week strike, denting hopes among investors and management of a resolution to the bitter dispute. The union vote against the deal, which would have raised wages by 35% over four years, reflects years of discontent among workers who felt short-changed in negotiations a decade ago and threatens to deepen the company's financial crisis.
• The euro fell to its lowest in two months on expectations of further ECB interest rate cuts, falling below $1.08 as traders see a possible decline to parity with the dollar.
• Traders' optimism about the stock market has reached levels seen just before last year's 10% stock market plunge. Such high levels of enthusiasm could be a warning sign, as historically, excessive optimism often precedes significant market corrections, - MarketWatch.
• Dozens of poisonings reported at McDonald's (MCD) in the US. MCD shares fell 5%.
• The US government bond market is experiencing its biggest sell-off since 1995 after the Fed began cutting interest rates - BBG.
• BofA: We expect the Fed to cut rates by another 50 bps in 2024, then four more 25 bps cuts in 2025, ending at 3.25%. We expect inflation to slow below 2.3% in 2025-2026 at 3.25%.
• Apple (AAPL) may completely stop production of the Vision pro by the end of the year - the Information. It also reported a decrease in orders for the iPhone 16 by 10 million units.
• Cryptocurrency exchange Binance lost 13% of its spot trading market share in a year. Spot trading volume amounted to $5.78 trillion, the overall share among the 22 largest centralized exchanges decreased from 52.5% to 39.5%.
• Donald Trump's (DJT) stock has become something of a proxy for his chances of winning the presidential election. Traders are buying DJT options that expire a week later, on November 15, rather than immediately after the election, on November 8, reflecting expectations of a delay in the announcement of results. Most of the states where the outcome of the election will be decided will likely have a narrow margin of votes, which could delay the counting and cause litigation.
• Tokyo Metro shares rose 45% on their first day of trading, marking the best debut for a major Japanese IPO since 2018.
• Oil falls on rising US crude inventories and progress in ceasefire talks. EIA crude inventories: CRUDE = +5.474M (-2.191M previous).
• An AI-powered supercomputer from Nvidia has been “turned on” in Denmark. It will help local pharmaceutical companies develop new drugs. The Gefion machine, which uses 65 km of cable and weighs 30 tons, was symbolically “connected to the network” by Nvidia CEO Jensen Guang and King Frederik X of Denmark on October 23.
• Gucci owner Kering reported a 16% drop in third-quarter sales due to weak demand in China. French luxury goods group Kering warned that its full-year operating profit would almost halve after reporting a bigger-than-expected fall in third-quarter sales.
• JPMorgan Chase is in talks to start trading physical liquefied natural gas again after more than a decade, in line with Chief Executive Officer Jamie Dimon's calls for more domestic production and energy exports.
• Stellantis NV plans to launch a test fleet of electric vehicles with solid-state batteries within two years, a step toward potential commercialization of the technology, which aims to improve the performance of electric vehicles.
• Goldman Sachs and Apple will pay more than $89 million in a consumer rights case, a major consumer watchdog group said Wednesday.
• The yen fell to its weakest level against the dollar in nearly three months, reviving fears that Japanese officials could take steps to support the currency if it continues to depreciate.
• Arm Holdings (ARM) is canceling a license that allowed longtime partner Qualcomm (QCOM) to use Arm's intellectual property to design chips, potentially escalating a legal dispute. ARM shares fell 7% yesterday, while QCOM shares fell 4%.
• Qualcomm and Google are teaming up to bring AI to cars. Qualcomm says its Snapdragon digital chassis, chipset and related technologies will power a “digital cockpit” using Google’s generative AI.
• Meta Platforms (META) is losing third-party augmented reality developers to rival Snap (SNAP) after it unexpectedly decided to close its AR studio.
• Coca-Cola (KO) reported better-than-expected third-quarter results, thanks to higher prices but not higher sales.
• HSBC CEO says management layoffs are inevitable following reorganization.
• McDonald's shares fall after E. coli outbreak linked to Quarter Pounder kills one person in US
• Wall Street ramps up headcount as election approaches, expecting volatile trading.
• Boeing CEO seeks dramatic changes at struggling planemaker ahead of contract vote
• Volvo Cars beat forecast but downgraded outlook due to market slowdown.
• General Dynamics' revenue grows due to defense demand.
• CME Group profit soars on record trading potential.
• Wabtec raises full-year profit forecast amid strong demand for freight and transit.
• Coca-Cola expects revenue to increase in 2024 due to growing demand for soda in the United States.
• Amphenol forecasts positive fourth-quarter sales and profit on strong demand for electronics equipment.
• Stellantis to launch fleet of electric vehicles powered by Factorial solid-state batteries.
• The source said TSMC stopped supplying chips to the customer after they were discovered in Huawei products.
• Teledyne's third-quarter profit rose on strong defense demand.
• Software company Roper raises full-year forecast above estimates on strong demand
• EU Tech Security Candidate to Promote Use of AI and Battlefield Technology
• Nigerian Court Orders Binance Chief Released After Charges Dropped
• AT&T beats wireless subscriber forecasts on demand for premium plans.
• Study shows Switzerland attracts less foreign currency from wealthy clients due to Credit Suisse collapse
• Northern Trust's quarterly profit jumps on higher asset management fees.
• HSBC CEO says management layoffs are inevitable following reorganization.
• Head of Italy's banking lobby sees growing competition for term deposits.
• CME Group profit soars amid record trading rates.
• UAE lender ADCB reports 23% rise in third-quarter net profit, beating forecasts.
• The Bank of Canada cut its benchmark borrowing cost by 50 basis points.
• Deutsche Bank flags credit risks as it returns to profit in Q3
• Stocks morning after earnings morning after earnings
TSLA +12% to $240
TMUS +1%
LUV +1%
NOW -1%
IBM -2% (AI business is growing quickly, but not enough to support stocks)
Key events that could impact markets on Thursday:
- Eurozone, France, Germany, preliminary PMIs (October)
- UK Flash PMI (October)
- US Preliminary PMI (October)
- US Weekly Jobless Claims
- Various policy speeches from the Bank of England, European Central Bank and Federal Reserve
Fundamental news
• The Bank of Canada, as expected, cut its key interest rate from 4.25% to 3.75%. The regulator notes that the economy and inflation are slowing in line with forecasts.
• Warren Buffett says he won't support any political candidate - Bloomberg.
• U.S. existing home sales fell to their lowest level since 2010 in September, as potential buyers waited for further declines in mortgage rates and more attractive asking prices.
• IMF chief says US debt is sustainable. US debt remains sustainable despite steady growth because policymakers have plenty of room to get debt under control and an enviable combination of strong growth and easing financial conditions.
• The World Bank will double investment in agriculture to $9 billion a year by 2030. “We looked at challenges from all sides to increase food production.”
• The US has confirmed that North Korea has sent 3,000 troops to Russia for training and possible combat in Ukraine.
South Korea's spy agency said North Korea has sent more than 13,000 containers of artillery, missiles and other conventional weapons to Russia since August 2023. South Korea has sent humanitarian and financial aid to Ukraine but has so far avoided direct arms deliveries.
• Kamala Harris has announced her intention to raise the federal minimum wage to $15 an hour. Trump has accused British Labor of interfering in the US election - BBC. Two weeks before the US presidential election, Donald Trump's campaign team has filed a complaint with the US Federal Election Commission accusing Britain's ruling Labor Party of interfering in the US election by helping Trump's rival Kamala Harris campaign.
• Turkey has quietly banned the export of more than 40 categories of American goods to Russia - FT. This happened after Washington warned Ankara of "consequences" if it does not stop trading in goods that could be used by Moscow for the war in Ukraine.
"A black mark on Erdogan for getting closer to BRICS."
This is how Turkish political scientists and social networks are reacting to the terrorist attack at the Tusaş aviation company in Ankara.
They believe that the attack on a strategically important aerospace company for the state is a warning to the head of Turkey from the collective West for trying to get closer to BRICS.
• The United States fears Russian interference in the second round of elections in Moldova. “Russia did everything it could to disrupt the elections and referendum and undermine democracy in Moldova, including through illegal financing and vote-buying, disinformation, and malicious cyber-attacks,” said US Secretary of State Antony Blinken.
• Russia has reported an “unprecedented” cyberattack on its Foreign Ministry during the BRICS summit.
• Brazil's Lula calls on BRICS to create alternative payment methods.