The dollar decided to return after taking a three-month vacation from its strongest self, and the stock market experienced some volatility. Traders are essentially holding their breath, waiting for a flurry of US economic data to come in before the US and Japan fall into holiday mode.
The Nasdaq 100 fell slightly, presumably still getting over the news that Nvidia Corp.’s earnings weren’t the talk of the town, while the S&P 500 futures were feeling a little lethargic and weren’t really moving anywhere. Positively, the Stoxx Europe 600 index decided to dance a little and rose a little bit.
Now, some fascinating things happened in the world: after a little drama, Sam Altman returned to OpenAI, and Israel and Hamas agreed to a temporary ceasefire (queue the peace signals). Remarkably, though, traders weren’t particularly alarmed by these developments, and the risk-on attitude persisted in its cautious state. Treasury yields were not making much of a fuss, but they were playing it cool.
We’re excitedly awaiting US data on durable goods orders, consumer confidence, and unemployment claims. These seem to be the hints that will help us decipher the direction of monetary policy, particularly in light of the Federal Reserve’s recent rate-setting disclosure that caution is the prudent course of action.
The decision to “proceed carefully” with future interest rate changes and to link any tightening to the achievement of the inflation target has the policymakers bunched up. A heads-up is being given by swap contracts related to Fed meetings, which indicate a roughly 25% possibility of a first rate decrease in March—a little bit less than before the FOMC minutes were revealed.
Senior currency strategist Sean Callow of Westpac Banking Corp. offered some opinions on Bloomberg Television. The fact that markets are even considering lower rates in the first quarter, he noted, indicates that things won’t be easy for the US dollar. He believes that as the Fed’s December meeting draws near, the markets will be watching for a shift in rhetoric that would lessen the likelihood of further raises.
Let us now focus on a few prominent figures in Europe. The accounting software provider, Sage Group Plc, had a positive day following better-than-expected earnings. The steel manufacturer, Thyssenkrupp AG, also moved up the ladder following the release of its fourth-quarter earnings. But boy, did the home-improvement retailer Kingfisher Plc have a rough day following the reduction of its earnings guidance?
A little misstep occurred in the equity sector in Asia in the meantime. Particularly in mainland China, where IT and industrial enterprises were falling behind, AI stocks suffered.
Let’s talk about crypto now. After Binance Holdings Ltd. and its CEO Changpeng Zhao entered guilty pleas to several major counts involving money laundering and sanctions violations, the market experienced a slight decline. A settlement between Binance and the US allowed the cryptocurrency exchange to continue operating. The value of Bitcoin and BNB, the token associated with Changpeng Zhao’s Binance empire, declined somewhat.
Global markets reacted positively to the announcement of a brief ceasefire between Israel and Hamas. A four-day ceasefire in the Gaza Strip is exchanged for the release of roughly fifty hostages. Additionally, several Palestinian inmates in Israeli jails will be released. Just in time for an OPEC+ meeting on supply this weekend, oil, ever the drama queen, chose to calm down and even add a little uncertainty with reports of another build-up in US stockpiles.
Let’s now review the major activities scheduled for this next week:
– Consumer confidence in the Eurozone on Wednesday.
– On Wednesday, the US will report initial unemployment claims, University of Michigan consumer sentiment, and orders for durable goods.
– Tiff Macklem, governor of the Bank of Canada, will speak on Wednesday.
– S&P Global Manufacturing & Services PMI for the Eurozone on Thursday.
– Japan is off for Labor Day on Thursday, while US markets are closed for the Thanksgiving holiday.
– The October policy meeting report is released by the European Central Bank on Thursday.
– Black Friday, which has long marked the beginning of the US Christmas shopping season.
– Christine Lagarde of the ECB will talk on Friday.
Now for the specifics of the market movements:
Stocks:
– As of 8:53 a.m. London time, the Stoxx Europe 600 decided to flaunt its status and increased by 0.3%.
– S&P 500 futures were hardly moving and were in a relaxed state of mind.
– Nasdaq 100 futures experienced a minor decline of 0.2%.
– The Dow Jones Industrial Average futures didn’t seem to be moving too much.
In the wider world:
– The MSCI Asia Pacific Index experienced a 0.6% decline.
– With a 0.6% decline, the MSCI Emerging Markets Index likewise entered the downward trend.
Exchange Rates:
The Bloomberg Dollar Spot Index opted for a 0.3% increase.
Not feeling it, the euro fell 0.2% to $1.0885.
– It was a bad day for the Japanese yen as well, dropping 0.6% to 149.33 per dollar.
– The offshore yuan fell 0.2% to 7.1573 per dollar, joining the decline.
– Not to be outdone, the British pound fell by 0.2% to $1.2510.
Digital currency:
– Bitcoin made the decision to slightly decline, falling 0.8% to $36,551.
– Contrary to expectations, ether increased by 0.9% to $2,004.45, defying the trend.
Bonds:
– The yield on 10-year Treasuries increased to 4.41%, up one basis point.
– The 10-year yield on German bonds increased by one basis point to 2.58%.
– The 10-year yield in Britain increased by three basis points to 4.14%, marking a larger jump.
Goods and services
– The price of Brent crude was essentially unchanged.
– Being the diva that it is, spot gold increased by 0.1% to $2,000.39 per ounce.
That’s it—a comprehensive look at what’s going on in the financial world, delivered to you by Bloomberg Automation’s magic touch with a dash of wisdom from Toby Alder, Matthew Burgess, and Masaki Kondo. Let’s toast to remaining ahead of the market curve!