Daily Market Outlook - Tuesday, Oct. 29

By Patrick Munnelly of Tickmill

Tuesday, October 29, 2024 7:30 AM EDT

Cutout paper illustration representing scheme and Stocks inscription

Image Source: Pexels

Tuesday saw erratic trading in Asian stocks as investors readied themselves for three days of tech mega cap earnings reports on Wall Street, beginning this evening with Alphabet, the parent company of Google. With the JOLTS job openings report, one of the Federal Reserve's favoured employment indicators, due on Tuesday ahead of the much-awaited monthly non-farm payrolls data on Friday, the dollar was trading close to a three-month high. After reaching three-month highs, U.S. Treasury yields decreased.

Hong Kong's Hang Seng index was 0.49% higher, paring earlier gains of up to 1.6%. Mainland Chinese blue-chip stocks slipped into the red shedding 1%, giving up an early rise of 0.68%. After plunging to a three-month low on Monday, the yen recovered as the future for Japanese fiscal and monetary policy was clouded by the coalition government's crushing defeat in the weekend elections. Prime Minister Shigeru Ishiba's Liberal Democratic Party and its junior partner Komeito lost their parliamentary majority in Japan, which could result in higher fiscal spending and make it more difficult for the Bank of Japan to normalise interest rates. As a result, a period of negotiations to form a coalition government is anticipated. After a cautious start, the Nikkei index bounced back to build on the gains from the previous session. Crude rose a little after plunging on Monday amid indications that the Middle East conflict would not intensify, as Israel refrained from attacking Iran's nuclear and oil installations in a weekend retaliatory strike. Even if certain betting sites and financial markets are predicting that Republican Donald Trump will defeat Democrat Kamala Harris, the U.S. election is nearing its conclusion and opinion surveys are still too close to declare a winner.

Although the banking industry is doing better than it was in the years after the global financial crisis, investors still want to know that long-term profits can be relied upon because the European Central Bank is leading its major international peers in lowering interest rates. On the other hand, because of the strong economic indicators, especially in the job sector, the Federal Reserve can afford to take its time easing policy. The Fed has made the job market its top priority, which is why the dollar and Treasury rates have paused near three-month highs before the central bank's preferred JOLTS job vacancies report. With no clues from Fed officials already in the blackout period, Friday's much-anticipated monthly payroll numbers will set the setting for the policy decision on November 7.

Tesla's bold sales forecasts last week sparked a 22% surge in its stock, the biggest rally in a decade. However, markets are cautious about Elon Musk's tendency to overpromise. Nvidia, the AI poster child, will report results much later in November, as it has been competing with Apple for the title of most valuable company. Upcoming chipmaker results, starting with AMD today and Intel on Thursday, will provide insights into the continued strength of the AI frenzy.

Overnight Newswire Updates of Note

ECB Guindos Sees ‘Risks’ To Inflation Outlook
China’s Stimulus Data Showing Economic Stress
Japan’s Komeito Leader Ishi To Step Down
Japan's LDP, Opposition Scramble For PM Votes
Japan’s Job Market Tightens, Boosting Wages
NZ Job Growth Stalls, Labour Weakens
UK Shop Prices Fall, Retailers Warn Risks
HSBC To Buy Back $3B Shares As Profit Beats Estimates
Ford Lowers Profit Expectation, Pressure Of EV Losses
Porsche Staff To Join German Industry Wave Of Strikes
VW Workers Brace For Fallout From Years Of Dereliction
Gold Steadies Ahead Of US Data, Election Endgame
Crypto Outperforms On Trump Popularity, BTC Above $70K

(Sourced from reliable financial news outlets)

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)

USD/JPY: 151.15 ($1.34b), 147.50 ($1.08b), 147.95 ($832.8m)
EUR/USD: 1.0800 (EU2.56b), 1.0745 (EU490m), 1.1155 (EU446.4m)
USD/CNY: 7.1510 ($335.6m)
USD/CAD: 1.3810 ($560m), 1.3815 ($560m), 1.3870 ($364.6m)
AUD/USD: 0.7000 (AUD745.7m), 0.6150 (AUD700m), 0.6470 (AUD626.2m)
NZD/USD: 0.6425 (NZD529.2m), 0.6230 (NZD449.8m), 0.6070 (NZD434.3m)
GBP/USD: 1.3000 (GBP780m)
USD/MXN: 19.30 ($398.5m), 19.35 ($341.4m)f,19.11 ($322m)
USD/KRW: 1260.00 ($300m)

CFTC Data As Of 25/10/24

EUR net speculative long position disappears, now short 28,524 contracts, down from long 17,150 the previous week.
JPY long position drops to 12,771 contracts from 34,110.
GBP long position cut to 74,576 contracts from 85,802.
AUD long position increases to 27,679 contracts from 19,269.
CAD short position grows to 140,631 contracts from 122,393.
Speculators trim CBOT US 10-year Treasury futures net short position by 16,874 contracts to 848,191
Equity fund managers raise S&P 500 CME net long position by 15470 contracts to 1,065,824
Equity fund speculators trim S&P 500 CME net short position by 19,439 contracts to 304,612