Daily Game Plan

by Contributor
on October 17, 2024

TODAY’S GAME PLAN:  from the trading
desk, this is not research

TODAY’S ECONOMIC DATA:  ET 8:15 a.m.: ECB Rate Decision, US Initial Jobless Claims, US October Philadelphia Fed
Business Outlook, US September Retail Sales , 8:45 a.m.: ECB’s Lagarde speaks, 9:15 a.m.: US September Industrial Production, 10:30 a.m.: US EIA Natural Gas Storage, 11:00 a.m.: US EIA Crude Oil Inventories, 11:00 a.m.: Fed’s Goolsbee speaks, 11:30 a.m.: US
to sell $95 billion 4-week and $90 billion 8-week bills

HIGHLIGHTS and News:  

  • Swiss Food Giant Nestle said its sales have suffered this year due to boycotts of companies linked to Israel.
  • Ohtani launched a three-run homer and the Dodgers pulled away for an 8-0 victory against the New York Mets that gave them a 2-1 lead in the best-of-seven series.
  • The wreckage of a Navy jet that crashed on Tuesday afternoon was located on a mountainside east of Mount Rainier in Washington, according to officials.

 

Global stocks were predominantly higher outside of Asia, buoyed by a recovery in chip stocks following positive results from Taiwan Semiconductor Manufacturing Co.,
which contributed to gains across major indices. However, Chinese stocks reversed their earlier gains after a government briefing aimed at supporting the property market fell short of expectations. In Europe, inflation in the eurozone slowed more than initially
reported last month, reinforcing the likelihood of a second consecutive 25 basis point rate cut at today’s ECB meeting and raising the prospect of another cut in December. Meanwhile, gold reached a new record high, oil prices stabilized, and Treasury yields
increased.

 

EQUITIES:  

 

US equity index futures climbed higher, with Nasdaq 100 futures gaining following an upgraded revenue outlook from Taiwan Semiconductor Manufacturing Co., which alleviated
concerns about global chip demand and the sustainability of the AI hardware boom. Notable movers included Expedia Group, whose shares surged 7.7% after reports that Uber Technologies is exploring a potential bid for the online travel company, and Alcoa, which
gained 4.9% due to better-than-expected third-quarter adjusted EBITDA driven by rising alumina prices. Conversely, CSX shares fell 5.6% after the freight transportation company’s third-quarter revenue and earnings per share missed consensus estimates, attributed
to hurricane-related impacts. Overall, US chip stocks are expected to remain active following TSMC’s strong quarterly earnings, bolstered by robust sales of Nvidia AI chips despite challenges in the mobile sector.

 

Futures ahead of the bell: E-Mini S&P +0.4%, Nasdaq +0.8%, Russell 2000 -0.2%, DJI +0.05%.

European stocks rose on Thursday, driven by expectations of further ECB interest rate cuts and stabilization in the technology sector. Banks led the gains, with Nordea
Bank Abp jumping after improving its outlook and announcing a share buyback. Chip stocks advanced following TSMC’s strong earnings, while Nokia Oyj declined on missed sales estimates and Pernod Ricard SA rose on reiterated guidance. Mining stocks fell due
to China’s unimpressive property market efforts. Investors are focused on the ECB meeting, expecting a quarter-point rate cut and seeking clues from President Christine Lagarde’s press conference on future policy easing to support the euro-area economy. DAX
+0.6%, FTSE +0.36%, Stoxx 600 +0.73%, CAC 40 +1.1%.

Asian equities declined, with the MSCI Asia Pacific Index falling by as much as 0.4%, marking its fourth consecutive day of losses and putting it on pace for its longest stretch of declines
in nearly five months. This downturn was largely driven by a faltering rally in Chinese stocks, where mainland shares slid into correction territory and those in Hong Kong fell more than 1%, following underwhelming property sector support measures announced
by the government. The measures, which included nearly doubling the loan quota for unfinished residential projects to 4 trillion yuan ($562 billion), fell short of market expectations, leading a Bloomberg Intelligence gauge of Chinese developer stocks to tumble
more than 12%. Japanese and Indian stocks also fell, while those in Taiwan and Australia rose. The region’s outlook is further complicated by a selloff in technology companies and expectations that the Federal Reserve will delay interest-rate cuts, along with
slowing earnings in markets such as India and Korea.Topix -0.1%, Nikkei -0.7%, China’s CSI 300 -1.3%; Hang Seng -1.02%; Kospi -0.04%; ASX 200 +0.86%.

FIXED INCOME: 
 

Treasuries are experiencing a slight decline across the curve, reflecting a mild bear-steepening trend similar to European rates as markets await the European Central
Bank’s (ECB) monetary policy decision where a third deposit rate cut to 3.25% is anticipated. The US economic data slate today includes important releases such as jobless claims and retail sales, with US yields rising by less than 2 basis points, particularly
affecting the long end of the curve; the 10-year yield is around 4.03%, up 1.8 basis points from Wednesday’s close.

 

 

METALS: 

Gold climbed to a record high of $2,687.67 an ounce, ahead of key US economic data later Thursday, driven by demand for haven assets amid an increasingly tight presidential race and expectations
of Federal Reserve easing. The market is focused on upcoming US retail sales and jobless figures for clues on the Fed’s policy direction, while lower interest rates, strong central bank purchases, and geopolitical tensions continue to bolster gold prices.
Gold +0.3%, Silver +0.3%

ENERGY:   

 

Oil prices steadied after four days of declines, with Brent holding above $74 a barrel and West Texas Intermediate nearing $71, as traders balanced potential Middle
East production risks against disappointing economic stimulus announcements from China. The benchmarks had fallen nearly 7% earlier in the week following reports that Israel would avoid targeting Iran’s crude facilities but concerns over escalating Middle
East conflicts and US military actions in the region remain. The International Energy Agency warned of a potential surplus next year due to rising non-OPEC production and sluggish demand, unless major disruptions occur. WTI +0.1%, Brent +0.1%, Nat Gas +0.3%.

 

CURRENCIES:   

In currency markets, the US dollar index  firming near 10-week highs, as investors priced out an interest rate cut from the Federal Reserve at the next policy meeting and a potential
election victory by former President Donald Trump. The euro extended its losses for a fourth day, slipping to a fresh two-month low of 1.0849, ahead of the European Central Bank meeting where a 25 basis-point cut in the main policy rates is widely expected.
This anticipated rate cut, combined with slower euro-area inflation and the ECB’s likely continuation of its easing cycle, has pressured the euro. US$ Index -0.1%, GBPUSD +0.2%, EURUSD +0.05%, USDJPY -0.03%, AUDUSD +0.5%, NZDUSD +0.3%, USDCHF -0.2%.

 

 

 

Spot Bitcoin -1.2%, Spot Ethereum -0.7%. Bitcoin is up about 13% in the past seven days, well ahead of a global stock gauge and gold. Stan Druckenmiller cited crypto
as among the indicators that markets are pricing in a win for the former president.  

 

 

 

 

 

 

 

 

 

Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance 

 

Data sources: Bloomberg, Reuters, CQG

 

 

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