The CHF is the strongest and the EUR is the weakest as the NA session begins. The USD is mixed to lower with modest declines vs the GBP, JPY, CHF, CAD and AUD. The largest gain is vs the EUR. The USD is little changed vs the NZD.
Overnight, China reported better-than-expected growth in the third quarter. Gross domestic product (GDP) expanded by 4.9% year-on-year in July-September, although slightly lower than the 6.3% growth in the previous quarter, it exceeded expectations of a 4.4% increase. On a quarterly basis, GDP showed notable improvement, growing at 1.3% in the third quarter compared to a revised 0.5% in the previous quarter.
Additionally, China's industrial output in September matched the pace of August, rising by 4.5% year-on-year, and retail sales accelerated to a 5.5% increase in September from 4.6% the month before. These positive indicators suggest that China's economy is stabilizing, aided by stimulus measures, but challenges persist, particularly in the real estate sector, where concerns about defaults, exemplified by the situation with Country Garden, continue to loom.
U.S. President Joe Biden is in Israel today to address escalating tensions in the region following a missile strike on a Gaza hospital that resulted in numerous Palestinian casualties. Palestinian officials allege an Israeli airstrike caused the hospital attack, while Israel claims it was a result of a failed rocket launch by Palestinian militants, with both sides denying responsibility. The incident has heightened the already tense situation and led to the cancellation of a planned summit involving President Biden, Palestinian President Mahmoud Abbas, and Egyptian President Abdel Fattah al-Sisi. President Biden is scheduled to meet with Israeli Prime Minister Benjamin Netanyahu and the Israeli war cabinet, though the prospects for meaningful progress remain uncertain. Meanwhile, the United Nations Security Council is set to vote on a resolution calling for humanitarian pauses in the conflict to facilitate access to humanitarian aid in Gaza.
In other mid East and oil news today, the Iranian Foreign Minister has made a call for Islamic countries to implement an oil embargo against Israel, as reported by Al Jazeera. This statement triggered a response within the oil market, leading to session highs in WTI and Brent Dec'23 futures. However, despite this development, OPEC appears to have no immediate plans for an extraordinary meeting or any immediate actions in response to the Iranian Foreign Minister's call for the Israeli oil embargo. Crude oil is trading up by about 0.90% on the news from the Middle East.
In a Wall Street Journal interview with Nick Timiraos, Fed Pres. Harker expressed his belief that the Federal Reserve should extend its pause on interest-rate increases. Harker argued that despite some recent positive economic indicators, there is growing evidence that higher borrowing costs could slow down the economy. He suggested that the central bank can likely wait until early next year to assess the impact of the past 20 months of rate increases on inflation. Harker emphasized that the decision to support the July rate increase was a close call for him, and he would need to see a significant change in economic data, especially in terms of inflation, to support further rate hikes. He also mentioned that higher long-term bond yields have provided some comfort that the Fed has done enough to combat inflation, and he would consider lowering rates once inflation gets closer to the central bank's 2% target. Additionally, Harker discussed the pace of reducing the Fed's asset portfolio and the potential implications for financial markets.
A snapshot of the markets as the NA session gets underway shows:
- Crude oil is trading up $0.78 or 0.90% at $87.45. At this time yesterday the price was trading at $87.47.
- Spot gold is trading up up $22.84 or 1.19% at $1945.77. At this time yesterday the price was at $1924.86.
- Spot silver is trading up $0.41 or 1.8% at $23.20. At this time yesterday the price is trading at $22.69.
- Bitcoin is trading at $28,381. At this time yesterday the price was trading at $28,489.
In the US stock market, the major indices are trading lower. The earnings continue late yesterday when United Airlines and JB Hunt reported. United Airlines lower their forward guidance. Their shares are trading down -5.16%. JB Hunt also disappointed on profit expectations and their shares are down -3.14%. Coming into today, 83% of companies have so far topped earnings expectations, while about 70% have surpassed sales estimates. This is according to FactSet data.
In earnings released this morning:
State Street Corp (STT) Q3 2023: MIXED
- Adjusted EPS: $1.93 (BEAT, exp. $1.81)
- Revenue: $2.69 billion (MISSED, exp. $2.92 billion)
Morgan Stanley (MS) Q3 2023: BEAT
- EPS: $1.38 (BEAT, exp. $1.28)
- Revenue: $13.27 billion (BEAT, exp. $13.23 billion)
- Net Income: $1.98 billion (MISSED, exp. $2.06 billion)
- Procter & Gamble Co (PG) Q1 2023: BEAT
- Core EPS: $1.83 (BEAT, exp. $1.72)
- Revenue: $21.9 billion (BEAT, exp. $21.58 billion)
- US Bancorp (USB) Q3 2023:BEAT
- EPS: $1.05 (BEAT, exp. $1.02)
- Revenue: $7.03 billion (BEAT, exp. $7.02 billion)
- M&T Bank Corp (MTB) Q3 2023: BEAT
- EPS: $3.98 (BEAT, exp. $3.91)
- Revenue: $2.34 billion (BEAT, exp. $2.32 billion)
- Citizens Financial Group Inc (CFG) Q3 2023: MISSED
- EPS: $0.85 (MISSED, exp. $0.91)
- Revenue: $2.01 billion (MISSED, exp. $2.04 billion)
After the close, Tesla and Netflix will start to mix up the earnings when they report their earnings.
Looking ahead to earnings later today and this week shows:
- Thursday: Philip Morris, AT&T, American Airlines, TSMC, Nokia, Intuitive Surgical, CSX
- Friday: American Express
A snapshot of the stock futures currently shows
- Dow Industrial Average futures are implying a decline of -74 points. Yesterday the index rose 13.11 points
- S&P index futures are implying a decline of -17 points. Yesterday the index fell a modest -0.41 points
- NASDAQ futures are implying a decline of -80 points. Yesterday the index fell -34.24 points
Yesterday Nvidia fell sharply by -4.68% after restrictions on exports of some of their chips to China. Their shares are down an additional -1.68% in premarket trading today
In the European equity markets, the major indices are trading lower
- German DAX, -0.51%
- France's CAC, -0.50%
- UK's FTSE 100, -0.60%
- Spain's Ibex, -0.55%
- Italy's FTSE MIB, -0.20% (10 minute delay)
In the Asia Pacific market, major indices were mixed:
- Japan's Nikkei index rose 0.01%
- China's Shanghai Composite Index -0.80%
- Hong Kong's Hang Seng index -0.23%
- Australia's S&P/ASX index +0.30%
In the US debt market, yields are moving modestly lower after 2, 5, 10 year yields are closed at highest level going back decades (2007).
- US 2Y T-NOTE: 5.188% -2.6 basis points. At this time yesterday the yield was at 5.117%
- US 5Y T-NOTE: 4.845% -2.9 basis points. At this time yesterday the yield was at 4.753%
- US 10Y T-NOTE: 4.821% -2.5 basis points. At this time yesterday the yield was at 4.762%
- US 30Y BOND: 4.933% -1.8 basis points. At this time yesterday the yield was at 4.911%
- 2-10 year spread is at -36.4 basis points. At this time yesterday the yield spread was modestly higher at -35.9 basis points
In the European debt market, benchmark 10-year yields are trading mixed:
