Macro Monday (week 46): What now after the US midterms?
Saxo Bank Head of APAC Macro Strategy Kay Van-Petersen takes a look at the global agenda for a week that includes several key central bank meetings and quite a bit of fresh economic data.
Summary: The fear that stalked Wall Street yesterday has abated but even though advances are being made there remains much to recover.
Risk sentiment has improved since the Asia markets closed. European Central Bank President Mario Draghi’s press conference was benign. Wall Street is opening in positive territory but still has a long way to go to recover from yesterday’s meltdown. The US dollar extended European gains in New York except against the antipodean’s, which have inched higher.
The ECB did as expected and left policy and guidance unchanged. The statement repeated that Eurozone rates are staying parked until the summer of 2019. Draghi suggested that the ECB would provide improved clarity on its outlook at the December meeting when updated forecasts would be available. EURUSD touched 1.1431 before the press conference and was trading at 1.1375 at 14:00 GMT.
Sterling has been hammered again. GBPUSD triggered weak stop losses on this morning’s break of support at 1.2880 and traded at 1.2842 at 14:00 GMT. The rising risk of a ‘no-deal” Brexit is behind the move.
US September Durable Goods Orders surged 0.8% (forecast -0.9%), and Initial Jobless claims rose to 215,00, which helped support the early Wall Street gains.
Wall Street seemed pleased with yesterday’s strong earnings reports from Tesla (TSLA: Nasdaq) AMD: Nasdaq and Visa (v: NYSE) after the close yesterday and with the bounce in European equities. Better than expected US economic data, helped. The Dow Jones Industrial Average is up 0.75%, S&P 500 has gained 1.08%, and the Nasdaq has gained 1.88% as of 14:20 GMT. Microsoft (MSFT: xnas) reported earnings per share of $1.14, well above the $0.99 that was forecast, which bodes well for Alphabet (GOOGL: Nasdaq) and Amazon (AMZN: Nasdaq) quarterly reports at the close of business today.