Daily Game Plan

by Contributor
on October 18, 2024

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

TODAY’S ECONOMIC DATA:  ET 8:30 a.m.: US September Housing Starts, 9:30 a.m.: Fed’s Bostic speaks, 10:00 a.m.: Fed’s
Kashkari speaks, 12:10 p.m.: Fed’s Waller speaks, 12:30 p.m.: Fed’s Bostic speaks, 1:00 p.m.: US Baker Hughes Rig Count

HIGHLIGHTS and News:  

  • The betting volume for who will win the 2024 United States presidential race crossed $2 billion on the decentralized prediction platform Polymarket.
  • A 237-year old copy of the US Constitution sold for $9 million at auction, AP reported.
  • The Cleveland Browns plan to leave their open-air Cleveland stadium for a new domed one in Brook Park, Ohio.

 

Global stocks edged higher on Friday as China’s central bank has initiated measures to support its stock market following data indicating the economy grew at its
slowest pace in six quarters. The People’s Bank of China launched a specialized re-lending facility to assist companies with share buybacks and a swap facility to provide liquidity for institutional investors.
US equity index futures rose as traders reacted to these developments, while gold reached a new record. In corporate news, CVS shares fell 11% after missing estimates, Tesla is
under federal investigation for its Full Self-Driving system after several crashes, and TSMC is being investigated for potential violations of export rules related to Huawei.

 

EQUITIES:  

U.S. equity futures edged higher, buoyed by positive updates from Netflix and Apple, with S&P 500 futures rising. Sales of Apple Inc.’s newest iPhones in China are up 20% in their first
three weeks compared to the 2023 model. Intuitive Surgical saw a notable gain of 7% after reporting third-quarter earnings that exceeded expectations, while Netflix shares climbed 6% following strong subscriber growth in its latest earnings report. However,
Tesla’s stock inched lower as the U.S. government launched a federal investigation into its Full Self-Driving system after several crashes, including one fatal incident. CVS Health shares tumbled in early trading after the retail pharmacy chain reported third-quarter
preliminary profits that fell short of Wall Street’s expectations, along with higher-than-forecast medical costs. The company also named David Joyner as its new CEO, replacing Karen Lynch. Additionally, U.S.-listed Chinese stocks rallied in premarket trading
after President Xi Jinping pledged support for the tech sector, further enhancing market sentiment.

Futures ahead of the bell: E-Mini S&P +0.2%, Nasdaq +0.5%, Russell 2000 +0.3%, DJI -0.12%.

European equities remained largely unchanged on Friday as investors grappled with a series of disappointing earnings reports, raising concerns about the region’s economic strength. The
Stoxx Europe 600 Index traded slightly higher, while stocks sensitive to China’s economy, such as miners and automakers, saw gains following the Chinese central bank’s market support measures amid signs of economic slowdown. Notably, Volvo AB’s shares dropped
due to declining earnings amid reduced demand, and EssilorLuxottica also faced losses from a softening Chinese market. Despite a slight boost from the European Central Bank’s recent interest rate cuts, uncertainty looms over future easing and overall economic
health. Analysts suggest that while European equities may appear attractive due to lower valuations compared to U.S. markets, short-term volatility persists as investors await clearer signals regarding inflation and economic stability. DAX +0.3%, FTSE -0.2%,
Stoxx 600 +0.20%, CAC 40 +0.69%.

Asian stocks rebounded, with the MSCI Asia Pacific index climbing 1.1%, breaking a four-day losing streak, driven by strong performances from Chinese equities and
Taiwan Semiconductor Manufacturing Company, which reached a record high after raising its sales forecast. Chinese stocks surged following President Xi Jinping’s commitment to enhance technology development and the People’s Bank of China, introduction of a
re-lending facility for share buybacks, despite the economy slowing less than expected in the third quarter. Investor sentiment is shifting towards earnings performance as key sectors, including technology, show signs of recovery, although the MSCI gauge is
still set to end the week down for the third consecutive time. Notable movers included TSMC, which reported a 54% increase in net profit driven by AI demand, while other stocks like Infosys and Axis Bank experienced declines and gains, respectively. Overall,
optimism surrounding stimulus measures and strong earnings from major companies contributed to a more positive market outlook in Asia. Topix +0.04%, Nikkei +0.18%, China’s CSI 300 +3.62%; Hang Seng +3.61%; Kospi -0.59%; ASX 200 -0.87%.

FIXED INCOME: 
 

Treasuries remained steady with mixed yields, while European bond markets, particularly Italian bonds, outperformed amid a backdrop of anticipated interest rate cuts
by the European Central Bank. The US 10-year yield held around 4.095%, with Italian bonds benefiting from a faster pace of ECB easing priced into swaps following a recent policy decision. The ECB’s overnight index swaps indicate about 30 basis points of easing
for the December meeting, while Fed-dated contracts suggest a combined 42 basis points of easing in November and December. The US economic calendar included housing starts and building permits data, and several Federal Reserve officials were scheduled to speak,
adding to market dynamics.

 

METALS: 

Gold prices surged past $2,700 an ounce for the first time, reaching a record high of $2,714.10 amid rising geopolitical tensions following Israel’s killing of Hamas
leader Yahya Sinwar, which has intensified conflicts in the Middle East. This spike in gold prices is attributed to investors seeking safe-haven assets amidst uncertainty surrounding the upcoming U.S. elections and escalating global conflicts. Market analysts
predict continued bullish momentum, with forecasts suggesting prices could rise to approximately $2,917 by late October 2025. Gold +0.6%, Silver +1.2%

ENERGY:  

 

Oil prices inched lower and are set for a weekly decline, trading below $75 per barrel for Brent and around $71 for West Texas Intermediate, following the death of
Hamas leader Yahya Sinwar, which has heightened tensions in the Middle East. This week, Brent crude is on track for a drop of more than 5%, despite a report indicating a decrease in U.S. petroleum inventories for the fourth consecutive week. While sentiment
was briefly lifted by signs of improvement in China’s economy, oil demand remains uncertain, with the International Energy Agency forecasting a potential surplus next year due to rising global supply. WTI -0.1%, Brent -0.2%, Nat Gas +0.2%.

 

 

CURRENCIES:   

In currency markets, the dollar eased its weekly gains as the pound strengthened following unexpectedly positive UK retail sales data for September, defying expectations
of a decline. The Japanese yen also weakened against the dollar after previously breaching the 150 mark, prompting officials to monitor the foreign exchange market closely. Meanwhile, AUDUSD gained amid positive sentiment from China, reflecting a broader market
reaction to economic data and central bank policies.US$ Index -0.18%, GBPUSD +0.26%, EURUSD +0.12%, USDJPY -0.14%, AUDUSD +0.21%, NZDUSD +0.23%, USDCHF +0.01%.

 

 

Spot Bitcoin -1.2%, Spot Ethereum -0.7%.

 

 

 

 

 

 

 

 

 

 

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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