Morning Brew October 31 2022
Senior Relationship Manager
Summary: Central banks Key as dovish hopes and earnings boost equities
The week will most likely be driven by central banks and company earnings – unless there is a significant surprise elsewhere.
The Fed will release rates on Wednesday, the Royal Bank of Australia on tomorrow and the Bank of England on Thursday.
While there is little doubt that there will be a 75 Basis point hike on Wednesday, there are rising hopes for slightly more dovish outlook from there. The December meeting is only seen to hike by 50 basis points, the peak rate is currently seen at 4.92% in May 2023.
Equities rose on that hope on Friday, FX and rates are not yet convinced. US 10 year yields remain at 4% and the USD Index in near 111, the US 500 rose to 3887, the US Tech 100 to 11500 and the GER40 to 13300.
Besides hopes for a dovish Fed, a shift in earning expectations boosted the sentiment, Analysts now see third-quarter earnings growth of 4.1%, up from 2.5% for the 500 stocks in the S&P Index.
GBPUSD Is trading just below 1.16, EURUSD below parity again at 0.9940, USDJPY 147.90, Gold 1640 and Silver 19.10.
The Swiss National Bank lost 142.2 billion Swiss francs ($142.60 billion) in the first nine months of 2022
Credit Suisse released details of its plan to raise 4 billion Swiss francs from investors, itis said to tap 20 banks for a capital increase acc to Reuters.
Chinas Manufacturing PMI disappointed at 49.2 vs 50 expected
Twitter was delisted from the New York Stock Exchange, Options will be cash settled in November,
The UN, Turkey and Ukraine pressed ahead to implement a Black Sea grain deal
Apple is likely to suffer a substantial decline in IPhone production due to covid restrictions in China.,
Luiz Inacio Lula da Silva narrowly defeated President Jair Bolsonaro in a runoff election in Brazil
Monday: Swiss FX Reserves, at HICP, EU HICP Inflation, EU GDP,
Tuesday: AU Rate, CN PMI, US PMI,
Wednesday: EU PMI, DE unemployment, FOMC Rate decision
Thursday: UK PMI and Rate decision, EU Unemployment, US PMI,
Friday; EU PMI, US Nonfarm Payrolls
Tuesday: AMD, Pfizer, BP
Wednesday: Novo Nordisk, GSK, Booking, Qualcom, CVS,
Thursday: Cigna Corp, Amgen, Paypal, Starbucks, EOG, DBS,
Physically Settled Futures:
NY Harbor ULSD - Nov 2022 (HOX2) will expire 31st Oct 15:00 GMT
Random Length Lumber - Nov 2022 (LBX2) will expire 1st Nov 15:00 GMT
:OILUKDEC22 will expire 31st Oct 16:00 GMT
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.