Market News by OnEquity

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Dollar Benefits from Safe-Haven Status Amid Middle East Tensions
The U.S. dollar rose on Wednesday, and the safe haven added to last session’s strong gains, as a missile attack from Iran on Israel escalated ongoing tensions in the region.

Dollar rises as safe haven​

The turmoil in the Middle East escalated overnight with Iran launching a salvo of ballistic missiles at Israel in retaliation for the recent assassination of Iranian-backed Hezbollah leader Hassan Nasrallah, along with Israel’s ground deployment in Lebanon.

Iran has reported that its attack is over, barring further provocations, although Israel has promised to make a response, which could lead the United States, one of its most important allies, to become a participant in the tensions in the region.

“The escalation in the Middle East has led markets to price in an increased risk of a full-blown conflict in the region, which could involve the U.S.,” ING analysts said in a note.

The dollar was also boosted Tuesday by better-than-expected data related to U.S. job openings, especially ahead of the official monthly jobs report due Friday.

“Although ISM manufacturing was a bit softer than expected and prices paid fell below 50.0, the Fed is focused on the labor market, and the surprising rebound in job openings for August is contributing to a near-term bullish case for the dollar,” ING added.

The ADP nonfarm employment figure for September will be released on Wednesday.

Euro Shows Signs of Stability​

In Europe, the EUR/USD traded flat at 1.1067 after experiencing its largest drop in nearly four months on Tuesday. This drop came on further signs of cooling inflation in the eurozone.
The region’s inflation rate fell below the European Central Bank’s (ECB) target of 2.0% in September, and traders will closely watch comments from ECB officials, including Vice President Luis de Guindos and Chief Economist Philip Lane, for more guidance on the central bank’s monetary policy outlook.
Citigroup, in a note published Tuesday, reported that it now expects the ECB to cut interest rates by 25 basis points at its October 17 meeting, with additional cuts expected in December and through early 2025, bringing the policy rate to 1.5% by September 2025.
Meanwhile, GBP/USD was up 0.1% at 1.3293, still well below the previous week’s high of 1.3430, a level not seen since February 2022.

Yen Retreats Amid Interest Rate Uncertainty​

USD/JPY rose 0.3% to 144.06 after Japan’s newly appointed Finance Minister, Ryosei Akazawa, said on Wednesday that Prime Minister Shigeru Ishiba expects the Bank of Japan (BOJ) to carefully assess the timing of raising interest rates again.
Minutes from the BOJ’s July meeting, released earlier this week, indicated that policymakers were divided on how quickly the central bank should proceed with further interest rate hikes.
Meanwhile, USD/CNY climbed to 7.0185, with the yuan remaining quiet as Chinese markets are closed for Golden Week, which runs until next Tuesday.

 

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U.S. Stocks Fall Amid Middle East Tensions, Nike and ADP Payrolls in Focus
U.S. stocks fell on Wednesday, as escalating tensions in the Middle East and disappointing news from sportswear giant Nike weighed heavily on investor sentiment. On Tuesday, the major indexes recorded a negative session on Wall Street, the first trading day of the new month and quarter, following Iran’s launch of ballistic missiles at Israel in retaliation for Israeli strikes against Hezbollah in Lebanon.

The Dow Jones index dropped nearly 170 points (0.4%), the S&P 500 index was down almost 0.9%, and the tech-heavy Nasdaq Composite plunged 1.5%.

Middle East Tensions Hit Risk Sentiment​

The negative sentiment persisted on Wednesday after Israeli Prime Minister Benjamin Netanyahu vowed retaliation for Tehran’s airstrikes, stating that Iran had “made a big mistake” and “will pay for it.” The United States also warned of “serious consequences” for Tehran’s actions, with Defense Secretary Lloyd Austin emphasizing that Washington is “well prepared” to defend its interests in the Middle East.
While the situation may escalate further, UBS analysts expressed their view that “it will not result in an all-out war between Israel and Iran, including their respective allies.”

Nike Withdraws Its Full-Year Forecast​

Adding to the negative market sentiment, Nike (NIKE) disappointed investors by withdrawing its full-year forecast and reporting a 10% drop in quarterly revenue. As a result, Nike’s shares dropped more than 5% before the market opened.
This development comes at a time when Nike is undergoing an executive-level shake-up, with current CEO John Donahoe being replaced by company veteran Elliott Hill. Donahoe’s tenure saw the company struggle with stiff competition in the $150 billion-a-year global sneaker market, contributing to weaker results.

ADP Payrolls in Focus​

The monthly ADP private payrolls release will provide further insight into the state of the nation’s labor market.
The ADP private payrolls release will provide more information regarding the current state of the U.S. labor market ahead of Friday’s non-farm payrolls release, which will likely signal the direction of the market ahead of the Federal Reserve’s next interest rate meeting.

Oil Prices Rise Amid Middle East Turmoil​

Crude oil prices surged on Wednesday due to the escalating tensions in the Middle East. Meanwhile, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are set to meet later in the session, though no immediate changes in production are expected.
U.S. crude inventories fell by approximately 1.46 million barrels in the week ending September 27, compared to expectations of a 2.1 million barrel decline, according to data from the American Petroleum Institute. The official government inventories report is expected later in the day.

 

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Cryptocurrency Markets Reeling From Global Uncertainty Over Middle East Conflict
Bitcoin plummeted as the market reacted to the ongoing conflict between Israel and Iran. On a macroeconomic level, crypto-asset markets have been shaken by the escalation of geopolitical tensions between Iran and Israel, challenging the notion of ‘Uptober’ and raising doubts about the role of digital assets like cryptocurrencies during global crises.
As the conflict unfolds, its collateral effects are being felt across all financial markets, with some cryptocurrencies and ETFs experiencing considerable volatility.

Market Impact and Consolidations​

The immediate response to Iran’s missile strike against Israel sent Bitcoin down to around $60,200, indicating a considerable 6% decline from recent highs of approximately $64,000. This drop was not limited to Bitcoin, as Ethereum and other altcoins also posted losses, with Ethereum falling by more than 4% and Solana down 5%.
The market turmoil triggered massive liquidations, with Coinglass reporting that $523.37 million was lost within just 24 hours. Long positions suffered the most, with $451 million liquidated compared to $71 million in short positions. This volatility resulted in the liquidation of 154,011 traders, demonstrating the significant impact of the ongoing crisis on the cryptocurrency market.
The rapid market decline has drastically altered investor sentiment. The cryptocurrency fear and greed index, a key measure for analyzing market sentiment, dropped from a “greed” level of 61 to a “fear” level within 42 days.
Additionally, U.S. spot Bitcoin ETFs recorded significant outflows, with withdrawals totaling $242.53 million on October 1 alone. This marked the largest outflow in nearly a month and the third largest in five months, signaling a broader pullback from crypto-assets amid heightened global uncertainty.

Macroeconomic Implications and Outlook​

The current crisis calls into question the idea that cryptocurrencies, especially Bitcoin, serve as a safe haven during global turmoil. Although some advocates have long argued that Bitcoin’s decentralized nature makes it an ideal hedge against geopolitical risks and tensions, its recent behavior suggests otherwise.
However, not all analysts view this decline as a long-term setback. For instance, André Dragosch, European head of research at Bitwise, points out that Bitcoin has historically demonstrated resilience in recovering from geopolitical turbulence.

 

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Dollar Steady on Payroll Gains, Euro Eases on Weak Data
The U.S. dollar stabilized on Monday, holding onto gains from Friday’s strong jobs report, ahead of key inflation data and minutes from the Federal Reserve’s latest meeting.

Payrolls Help Boost the Dollar​

The U.S. dollar stabilized on Monday, holding onto gains from Friday’s strong jobs report, ahead of key inflation data and minutes from the Federal Reserve’s latest meeting.
The growth in U.S. payrolls eased fears of a slowdown in the U.S. economy and reinforced the idea that the Federal Reserve will not need to cut interest rates sharply, boosting the dollar. According to the FedWatch tool, traders largely dismissed bets on a 50 basis point cut at the next Fed meeting and estimated a 25 basis point cut with over 90% certainty.
This week, the focus will be on speeches from several Fed officials, inflation data, and the minutes of the September meeting. The Fed cut rates by 50 basis points at the meeting and signaled the beginning of an easing cycle, though it emphasized that future rate cuts will be data-dependent.
Analysts at ING noted that “Friday’s extraordinary U.S. jobs report triggered the kind of repricing of rate expectations that we thought would materialize in a few weeks.” Markets are now aligned with the Dot Plot projections, expecting 25bp cuts in November and December. The dollar has also benefited from safe-haven demand amid turmoil in the Middle East, with Israel carrying out bombing raids against Hezbollah targets in Lebanon and the Gaza Strip on Sunday, ahead of the one-year anniversary of the October 7 attacks.

Weak German Data Hits the Euro​

In Europe, EUR/USD was down 0.1% at 1.0965 as the euro weakened after German factory orders fell by about 5.8% in August, highlighting the economic difficulties facing the largest economy in the eurozone. ECB chief economist Philip Lane, along with board members Piero Cipollone and Jose Luis Escriva, are scheduled to speak later on Monday and are likely to follow President Christine Lagarde in signaling a rapid pace of additional easing.
GBP/USD retreated slightly to 1.3113 after suffering a 1.9% drop the previous week, posting its biggest decline since early 2023. Bank of England chief economist Huw Pill said on Friday that the central bank should only gradually cut interest rates, a day after Governor Andrew Bailey indicated he may move more aggressively to reduce borrowing costs.

Doubts Arise Regarding the Bank of Japan’s Rate Hike​

USD/JPY fell 0.3% to 148.22, retreating after hitting its highest level since mid-August. The yen was hit by growing doubts about the Bank of Japan’s ability to continue raising interest rates in the coming months, especially amid uncertainty about the upcoming Japanese general election.
USD/CNY was virtually flat at 7.0176, with Chinese markets still closed for the Golden Week celebrations.

 

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U.S. Stock Markets Down: Fed, Inflation, Earnings in Spotlight
U.S. stock index futures were lower on Monday, shedding some of the previous week’s gains following strong payrolls data, with attention focused on more hints on interest rates and corporate earnings in the coming days.
Wall Street rose sharply on Friday after better-than-expected nonfarm payrolls data eased concerns about a slowing U.S. economy but reduced the likelihood of sharper interest rate cuts in the coming months.
Goldman Sachs strategists cut their 12-month recession probability by 5 percentage points to 15% in the wake of the September jobs report.
“September’s strong employment gains and upward revisions have for now calmed fears that labor demand may be too weak to prevent the unemployment rate from trending higher,” the strategists reported in a note.
On Friday, the Dow Jones index rose 0.8%; the S&P 500 index gained 0.9%, just below record levels, and the NASDAQ Composite index rose 1.2%.

Fed Comments and CPI Inflation​

This week, the focus will be on new signals from the Federal Reserve, with several policymakers taking the floor in the coming days. Rate-setting committee members Michelle Bowman and Neel Kashkari will speak on Monday, as will Raphael Bostic.
Their speeches will come ahead of the release of the minutes of the Fed’s September meeting, scheduled for Wednesday. While no rate cut was made, the minutes will provide insight into the Fed’s future policy direction.
This week will also see the release of consumer price index inflation data for September, which will likely influence estimates for the path of U.S. interest rates.

Banks Start the Third Quarter Earnings Season​

This week marks the start of the third-quarter earnings season, with major banks JPMorgan Chase (JPM), Wells Fargo (WFC), and Bank of New York Mellon (BK) releasing their quarterly results next Friday. Markets will be watching for resilience in corporate earnings in the face of pressure from high interest rates and continued inflation.
Bullish investors expect the results to help justify the stock market’s rising valuations. The S&P 500 is up 20% so far this year and trading near record highs, despite recent volatility generated by heightened geopolitical tensions in the Middle East.

Oil Prices Rise​

Oil prices rose again on Monday, adding to last week’s strong gains, as traders monitor continued tensions in the Middle East. Oil prices last week recorded their biggest weekly gain in nearly a year amid the growing threat of a regional war in the Middle East. Tensions have escalated in the region, with concerns over further conflict involving Iran and Hezbollah in response to recent developments.

 

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Cryptocurrencies Exempted from VAT in the United Arab Emirates
The UAE has exempted cryptocurrency transfers and conversions from value-added tax (VAT), making it a more cryptocurrency-friendly jurisdiction for digital asset transactions. The amendments to the UAE’s VAT regulations will exempt transfers and conversions of digital assets, including cryptocurrencies.

On October 2, the UAE’s Federal Tax Authority (FTA) made public the amendments to the country’s VAT rules. According to business consultancy PwC, the new rules provide for VAT exemptions for additional services, including investment fund management and the transfer and conversion of virtual assets. PwC highlighted that the exemptions on the transfer and conversion of virtual assets will apply retroactively as of January 1, 2018.

Tax Recovery for Virtual Asset Companies​

The audit firm detailed that in the UAE, virtual assets are defined as a “representation of value that can be traded or digitally transferred and can be used for investment purposes.”

However, the definition does not cover fiat currencies or financial securities.

The audit firm recommended that companies dealing in virtual assets analyze the exemption in their past VAT filings. PwC added that virtual asset companies should pay particular attention to the collection of their input tax.

UAE-based accounting and tax firm Finanshels noted that in the UAE, input tax collection authorizes registered companies to refund the VAT they have already paid on eligible business purchases.

In addition, PwC said that correcting historical returns may require voluntary disclosures by virtual asset companies.

United Arab Emirates Improves Cryptocurrency Regulations​

In addition to VAT exemptions, UAE regulators have been modernizing and simplifying their rules on virtual assets. On September 9, the Dubai Virtual Assets Regulatory Authority (VARA) and the Securities and Commodities Authority (SCA), the UAE’s federal financial agency, reached an agreement to jointly supervise virtual asset service providers (VASPs). Under the agreement, VASPs operating in Dubai that acquire a license from VARA can also provide services in the rest of the UAE by being registered by default with the SCA.
Meanwhile, VARA has also tightened its rules on cryptocurrency trading. On September 26, the regulator stated that companies promoting investments in digital assets must incorporate a prominent notice in their material. The notice must highlight that “virtual assets may lose their value in whole or in part and are subject to extreme volatility.”
The new tax policies come amid efforts by the United Arab Emirates (UAE) to push for new regulations in the digital currency sector and transform itself into the next financial technology innovation hub. In 2022, Dubai became a pioneer in the region by establishing the Virtual Assets Regulatory Authority (VARA) and issuing a cryptocurrency regulatory framework.
The rules set a specific licensing regime for exchanges. Recently, the VARA tightened its rules on cryptocurrency trading, requiring companies promoting investments in digital assets to add a disclaimer to their material.

 

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Dollar Falls from Highs, Euro Gains on Strong German Data
The U.S. dollar declined on Tuesday, though it remained near seven-week highs, as market traders analyzed the Federal Reserve’s monetary policy estimates following last week’s strong employment report.

The Dollar Appears to Be Pausing​

Friday’s strong payrolls report prompted traders to reassess the Fed’s rate-cutting path, with a 50 basis point cut in November mostly ruled out in favor of a 25 basis point reduction. The benchmark 10-year Treasury yield, reflecting moderate expectations, held above 4% on Tuesday, while the two-year yield reached its highest level in over a month. This, along with escalating tensions in the Middle East affecting risk sentiment, has helped boost the dollar.
Later this week, several Federal Reserve members will speak, along with the release of September’s inflation report and the minutes from the U.S. central bank’s previous meeting. ING analysts noted, “We have seen a fairly limited impact on the FX market from US 10-year yields hitting the 4% mark, which appears to be the tail end of the payrolls-induced move that has already triggered some considerable repositioning in dollar crosses.”
The analysts added, “There is a possibility that the FX market will cease to be guided by rates now that the Fed’s new 25 basis point per meeting rate path has become the market benchmark. We suspect that this week’s inflation data will not cause major directional changes in the dollar, which may instead respond more to the turmoil in the Middle East and the resulting moves in oil prices.”

The Euro Benefits from German Industrial Production​

In Europe, the EUR/USD rose 0.2% to 1.0995. The euro benefited from the release of better-than-expected industrial production data in Germany, as the August figure increased by more than 2.9% more than estimated compared to last month.
Moreover, the less volatile quarter-on-quarter comparison revealed that output was 1.3% lower in the June to August period than in the previous three months.
The European Central Bank meets next week and is expected to ease policy once again, having already cut rates twice this year, as inflation pressures have eased.

GBP/USD and Yuan Developments​

GBP/USD was up 0.2% at 1.3104, moving away from Monday’s three-week low of 1.3059. Data released on Tuesday revealed that UK retail sales rose at their fastest pace in six months during September, with total sales rising 2% year-on-year, helped by a 3.1% rebound in food retailers, while non-food transactions fell 0.3%.
USD/JPY fell nearly 0.4% to 147.55, giving back some of the strong gains posted the previous week. Data related to wage growth and household spending also supported Japan’s currency. USD/CNY rose 0.5% to 7.0506 as trading resumed after the weeklong holiday. Sentiment towards China was boosted by a series of stimulus measures from Beijing, including lower interest rates, though this added further pressure on the yuan, especially as US interest rates are now expected to continue rising.

 

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U.S. Stock Markets Rise, Fed to Make Key Announcements
U.S. stock markets and indexes rose on Tuesday, stabilizing after the previous session’s losses, as a strong payrolls report raised doubts about the Federal Reserve’s plans to sharply cut interest rates.

Bets on a smaller rate cut caused Wall Street to post steep losses on Monday, with the S&P 500 down about 1%, the NASDAQ Composite down 1.2%, and the Dow Jones Industrial Average losing nearly 400 points, or 0.9%, from record highs.

Rising Treasury yields also weighed, with the benchmark 10-year Treasury yield above 4% on Tuesday, while the two-year yield hovered around its highest level in more than a month.

Risk sentiment was similarly affected by fears of an escalation of conflict in the Middle East, as well as concerns over another major hurricane expected to make landfall in the U.S. this week.

Federal Reserve Officials Set to Speak​

Tuesday will see little economic data that could affect interest rate expectations, with the Fed’s September meeting minutes due on Wednesday and the consumer price index for September on Thursday.

Nonetheless, the week is full of Fed speakers, including Boston Fed President Susan Collins and Atlanta Fed President Raphael Bostic.

Traders estimate an 80.9% chance that the Fed will implement a 25 basis point rate cut in November and a 19.1% chance of no rate cut, according to CME FedWatch.

Traders were also pricing in a higher terminal rate for the Fed’s current easing cycle.

The Fed maintained its rates in September, signaling the start of a potential easing cycle. However, it continues to indicate that future rate cuts will depend on incoming data.

Honeywell Considers Spinning Off a Unit – WSJ​

In corporate news, Honeywell (HON) shares rose 2% before the market opened after the Wall Street Journal reported that the conglomerate is considering spinning off its advanced materials business.

Alphabet (GOOG) will be in the spotlight after a U.S. judge ordered its Google unit to reconfigure its Android operating system to allow rivals to create their own app marketplaces and payment options, which is a setback for the tech giant’s defense against antitrust lawsuits.

Third-quarter earnings season will likewise begin later this week, with major banks reporting.

Oil Prices Lose Ground​

Oil prices declined on Tuesday as traders took profits after a sharp rise triggered by concerns that an all-out war in the Middle East could impact oil supplies.

Weak reactions to comments from the state economic planner of China, the world’s largest oil importer, also weighed on crude.

The American Petroleum Institute will release the latest reports on U.S. crude inventories, with analysts estimating that stockpiles will increase by 1.9 million barrels.

 

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Today’s Stocks to Watch: LVMH, Alibaba, and DocuSign
LVMH and Rémy Cointreau stocks hit by China’s tariffs on European brandy. Alibaba and other Chinese tech stocks fall on loss of momentum in the Chinese market. DocuSign joins the S&P MidCap 400, replacing MDU Resources Group.

LVMH and Rémy Cointreau face new tariffs from China​

China announced new tariffs on brandy imports from the European Union, affecting Rémy Cointreau (RCO) shares, which fell 8%. LVMH, owner of Hennessy (MC), lost more than 3%.

Alibaba and other Chinese technology companies declined​

Stocks of U.S.-listed Alibaba (BABA), PDD, and JD were down more than 9% in premarket trading due to the Chinese market showing signs of weakness, reversing some recent gains.

Honeywell unveils spin-off of advanced materials division​

Honeywell (HON) plans to spin off its advanced materials division, The Wall Street Journal reports. The announcement sparked a surge in its shares even before the market opened.

DocuSign enters the S&P MidCap 40​

DocuSign (DOCU) will replace MDU Resources Group in the S&P MidCap 400 next Friday, according to data from S&P Dow Jones Indices. Following the announcement, DocuSign shares rose 5% in premarket trading, while MDU shares were flat.

Freeport-McMoRan and Alcoa down on commodity sales​

Stocks of Freeport-McMoRan (FCX) and Alcoa (AA), mining companies, fell more than 4% in trading due to a massive sell-off in commodities such as copper, driven by weakening bullish sentiment ahead of stimulus measures in China.

Super Micro Computer continues to rise on strong demand for servers​

Stocks of Super Micro Computer (SMCI) rose nearly 3% in premarket trading, following a 16% gain on Monday. The company has installed more than 100,000 liquid-cooled graphics processing units in artificial intelligence factories.

PepsiCo readjusts forecasts after sales drop​

PepsiCo (PEP) has cut its outlook for the year after announcing an unforeseen sales decline over the summer, sending its shares tumbling in the premarket session.

 

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Dollar rises pending Fed minutes; euro devalues
The U.S. dollar rose on Wednesday, in expectation of the analysis of U.S. interest rate estimates, at the same time the euro lost ground.

The dollar awaits the Fed minutes​

The dollar has seen a surge in demand since last week’s strong Friday payrolls report led the market to largely dismiss the option of another 50 basis point cut for November in favor of a much more traditional 25 basis point reduction.

According to CME’s FedWatch tool, investors at this time now estimate an 85% chance that a quarter basis point cut will be made, as well as a small chance that the Fed will keep rates unchanged.

Attention is now focused on the release of the minutes from the Fed’s September meeting, scheduled for later in the session.

During this meeting, the Fed made the determination to cut rates by 50 basis points, and the minutes are likely to show the reasons behind this decision. That said, Fed policymakers have been overly active over the past few days, so it may be debatable whether the minutes can provide anything new.

On Thursday, the consumer price index for September will be released, which is also likely to influence the Fed’s outlook.

Euro slips ahead of European Central Bank meeting​

In Europe, the EUR/USD was down 0.2% to 1.0962, with the euro depreciating on the back of better-than-expected German trade data, which raised hopes of a recovery in the eurozone’s largest economy.

Exports in Germany rose by 1.3% in August on month-on-month levels, according to official data revealed Wednesday, defying estimates of a 1.0% drop.

The European Central Bank will meet next week and is expected to ease monetary policy again, after cutting rates twice this 2024, due to weakening economic growth and easing inflationary pressures.

“A cut is very likely and it won’t be the last, the pace will depend on how the fight against inflation progresses,” ECB policymaker Francois Villeroy de Galhau said in an interview on Wednesday.

GBP/USD fell 0.2% to 1.3081, not far from Monday’s three-week low of 1.3059.

“The British press is starting to reach a feverish pitch with its speculation about what Chancellor Rachel Reeves will present in her first budget on Oct. 30,” analysts at ING mentioned, in a note.

“Investors remain on the lookout for any signs that the U.K. Gilt market is once again getting nervous about potential spending plans.”

New Zealand dollar falls on the back of rate cut​

NZD/USD was down 0.9% at 0.6085, with the Kiwi dollar hitting its lowest level on record since August 19 after the Reserve Bank of New Zealand cut interest rates by 50 basis points and left the door open to even more aggressive monetary easing.

USD/JPY rose 0.2% to 148.53 after touching a seven-week high of 149.10 on Monday. The yen could see volatility in the weeks ahead as Japan is due to hold an election on October 27, ahead of the Bank of Japan’s monetary policy meeting. On top of this, there is the US presidential election next month.

USD/CNY rose 0.1% to 7.0643, after the pair gained 0.6% in the previous session as trading resumed in full swing after the Golden Week vacation.

 

[OnEquity]

U.S. stock markets down ahead of Fed minutes; Google faces its breakup
Stock markets and indices declined in the U.S. on Wednesday, following last session’s gains, in anticipation of further signals from the Federal Reserve on interest rates.

The broad S&P 500 index rose 1%, while the tech-heavy Nasdaq Composite gained 1.4% and the Dow Jones Industrial Average gained about 0.3%.

Ahead of the Fed minutes​

Markets were now awaiting further signals on U.S. interest rates amid increasing doubts about the Federal Reserve’s plans to cut rates sharply in the coming months.

Minutes from the Fed’s September meeting will be released this Wednesday, when several officials are also due to speak.

The strong payrolls data released last week raised doubts about the Fed’s impetus to continue lowering rates at a faster pace. According to FedWatch’s CME, traders have an 81.1% chance of a 25 basis point cut in November and about an 18.9% chance of no change.

The Fed cut rates by 50 basis points last month and indicated that future cuts will depend on both inflation and the labor market.

On Thursday, the consumer price index for September will be released.

Google facing a possible breakup​

Google could break up, as the U.S. Department of Justice is looking into possible sanctions against its owner Aphabet (GOOG), following a landmark antitrust case that found the group guilty of abusing and profiting from its dominant market position. The DOJ is “considering structural and behavioral remedies” that would not allow Google to use products such as its web browser, app store or operating system to benefit its search business over its competitors, according to a federal court filing Tuesday.

“For more than a decade, Google has controlled the most popular distribution channels, leaving its rivals with little or no incentive to compete for users,” the DOJ added. Separately, global miner Rio Tinto (NYSE:RIO) has agreed to acquire its U.S. counterpart Arcadium Lithium (NYSE:ALTM) in a $6.7 billion cash deal, according to a statement released Wednesday.

This week, attention is also focused on the start of third-quarter earnings season, with a number of major banks set to report their results on Friday.

Oil prices rebound on expectations of U.S. inventories​

Oil prices rose on Wednesday, recovering from some of the previous session’s sharp losses, although signs of a large increase in U.S. inventories have dampened gains. Separately, data from the American Petroleum Institute released Tuesday revealed that U.S. crude inventories rose by 10.9 million barrels last week, well ahead of forecasts that expected an increase of 1.95 million barrels.

Official data from the Energy Information Administration will be released later in the session, and could raise concerns about cooling fuel demand in the U.S., especially as the South faces a series of devastating hurricanes.

 

[OnEquity]

Today’s Stocks to Watch: Alphabet, Boeing, and Rio Tinto
Key points:

• Worker strikes cost Boeing $1 billion per month, affecting its stock.
• Alphabet faces possible dismantling by the Department of Justice due to allegations of monopoly.
• Rio Tinto expands in the lithium market with the acquisition of Arcadium, while shares of Chinese companies fall in the United States.

DOJ Considers Action Against Alphabet​

Alphabet (GOOGL) faces potential government intervention as the U.S. Department of Justice considers breaking up Google to end what it describes as an illegal monopoly in search. The move, which is detailed in a court document filed Tuesday, may also include restrictions on how the company operates its platforms. Shares of parent company Alphabet were down 1% in premarket trading as investors reacted to the news.

Boeing Faces Billion-Dollar Costs from Worker Strikes​

Boeing (BA) is facing substantial financial losses due to ongoing worker strikes. The aircraft manufacturer withdrew its wage increase offer to striking workers, claiming that the machinists’ union presented “unreasonable demands.” Ratings firm S&P estimates that the strikes could cost Boeing $1 billion per month. Shares of Boeing were down 1.5% in premarket trading as concerns over the financial impact mounted.

Rio Tinto Expands in the Lithium Market with Arcadia Acquisition​

Rio Tinto (RIO) has entered into an agreement to acquire Arcadia Lithium (ALTM) for US$6.7 billion. This strategic acquisition allows Rio Tinto to solidify its position as a major player in the lithium market, a crucial resource for electric vehicle batteries. In response to the news, Rio Tinto’s U.S. shares dipped slightly in premarket trading, while Arcadia’s shares jumped 30%.

Chinese Market Slump Impacts Alibaba, JD.com, and NIO​

Alibaba (BABA), JD.com (JD), and NIO (NIO) saw their U.S.-listed shares decline in premarket trading following steep losses on Tuesday. Investors are becoming increasingly skeptical of Beijing’s stimulus plans, which have so far failed to reverse the slowdown in the Chinese economy. This pessimism continues to weigh heavily on Chinese stocks traded in the United States.

 

[OnEquity]

Dollar Falls from Highs, Euro Under Pressure on Weak Inflation Data
The U.S. dollar fell from recent highs on Tuesday as weak regional inflation data weighed on the euro ahead of the European Central Bank (ECB) meeting.

Dollar Falls from Highs​

In recent weeks, demand for the U.S. dollar has been boosted by employment and inflation data, which suggest a slower pace of rate cuts by the Federal Reserve. This follows the Fed’s decision to cut rates by 50 basis points in September, marking the start of an easing cycle.
Fed Governor Christopher Waller reiterated this cautious approach on Monday, emphasizing the need for more gradual rate cuts in the coming months. Waller suggested that the central bank should reduce rates only slowly over time.
The U.S. economic calendar is relatively quiet on Tuesday, although several Federal Reserve speakers, including FOMC members Mary Daly and Raphael Bostic, are scheduled to speak.
According to CME Fedwatch, traders see an 86.8% chance of a 25 basis point rate cut by November, with a 13.2% chance of rates remaining unchanged.

Euro Declines Ahead of ECB Meeting​

In Europe, EUR/USD was down 0.2% to 1.0892 following the release of weak regional inflation data, which increased the likelihood of further rate cuts by the ECB, starting as soon as Thursday.
Consumer prices in France fell more than initially estimated in September, with the harmonized consumer price index revised down to 1.4%, its lowest level since early 2021. Similarly, consumer prices in Spain fell below the ECB’s 2.0% target, while wholesale prices in Germany declined by 1.6% in September compared to the same period last year, indicating minimal underlying price pressures in the eurozone’s largest economy.
The ECB has already cut rates twice this year, and financial markets fully expect another 3.5% deposit rate cut later this week.
“The euro is losing ground ahead of Thursday’s ECB meeting and has now made a decisive break below 1.090,” analysts at ING said in a note.
“Rising rate differentials with the dollar are clearly shifting EUR/USD strategic positioning, with CFTC data showing that net long positions have fallen from 13.5% to 5.9% of open interest since the beginning of September.”

GBP/USD Slightly Higher​

GBP/USD rose 0.1% to 1.3070 after the UK unemployment rate unexpectedly fell to 4% in August, down from 4.1%, indicating underlying strength in the labor market. However, the decline in average earnings could pave the way for a further interest rate cut when the Bank of England meets next month.
The fall in average earnings may open the door to an interest rate cut when the Bank of England meets in November, provided Wednesday’s consumer inflation data does not deliver an upside surprise.

Yuan Under Pressure​

USD/CNY rose 0.4% to 7.1156, with the yuan under pressure due to uncertainty surrounding China’s fiscal stimulus plans. The Ministry of Finance has yet to provide key details regarding the timing and phasing of the anticipated measures.
China’s economy has also been impacted by a series of weak economic data. Monday’s figures showed that China’s trade balance contracted more than expected in September, with a sharp slowdown in export growth. Previous data indicated that the country’s disinflationary trend continues.
USD/JPY fell 0.4% to 149.11, with the yen recovering slightly after the currency pair threatened to break above resistance at the 150 level.

 

[OnEquity]

U.S. Stock Markets Stabilize Ahead of Quarterly Earnings Results
U.S. stock index futures and equities stabilized on Tuesday, consolidating after a rally in technology stocks hit all-time highs on Wall Street during the previous session, ahead of major company earnings data.

The major indexes posted solid gains on Monday, supported by strong performances in major technology shares, with market favorite Nvidia (NVDA) reaching an all-time high and coming close to surpassing iPhone maker Apple (AAPL) as the world’s most valuable company.
The S&P 500 rose 0.8% to a record high, the Dow Jones Industrial Average increased 0.5%, surpassing 43,000 points for the first time, while the NASDAQ Composite climbed 0.9%, nearing the all-time highs achieved earlier this year.
In addition to technology gains, stock markets were also buoyed by continued bets that the Federal Reserve will cut interest rates next month.

Q3 Earnings in the Spotlight​

Investors’ attention is now focused on the third-quarter earnings season, which kicks off in earnest on Tuesday.
Financial giants Bank of America (BAC), Goldman Sachs (GS), Citigroup (C), and Charles Schwab (SCHW) are set to report their results on Tuesday, along with Johnson & Johnson (JNJ), United Airlines (UAL), UnitedHealth (UNH), and Walgreens Boots Alliance (WBA).
Morgan Stanley (MS) will round out the bank earnings on Wednesday, while Netflix (NFLX), Blackstone (BX), and American Express (AXP) are expected to release their results later in the week.
Investors will be closely watching to see if company earnings hold up despite the backdrop of pressure from high interest rates and persistent inflation.
This week, aside from earnings, attention will also turn to retail sales data, as well as speeches from several Federal Reserve officials, who may provide further insights on the economy and interest rates.

Oil Prices Fall on Demand Fears​

Oil prices fell sharply on Tuesday, adding to recent losses amid concerns about slowing demand growth, particularly from top exporter China.

These fears were exacerbated by the Organization of the Petroleum Exporting Countries (OPEC) cutting its crude oil demand expectations for the third consecutive month.

Oil prices were also influenced by a reduced risk premium after Monday’s news that Israel will not attack Iran’s oil and nuclear facilities. Such an attack would have escalated the conflict and raised investor concerns about a potential supply disruption from the oil-rich region.

 

[OnEquity]

Today’s Stocks to Watch: J&J, Boeing, and Goldman Sachs
Key points:

• A number of energy stocks and Chinese companies posted significant market declines.
• Boeing and Goldman Sachs shares posted notable gains.
• UnitedHealth and J&J readjusted their earnings forecasts due to external factors.

Boeing Aims to Raise $10 Billion​

Boeing (BA) plans to raise at least $10 billion through the sale of new shares. This strategy aims to stabilize its finances after a period of instability. Shares rose nearly 1% in after-hours trading.

Goldman Sachs Reports a 45% Increase in Profits​

Goldman Sachs (GS) announced a 45% increase in quarterly earnings, exceeding market expectations. Stocks were up more than 3% in pre-market trading.

Bank of America Beats Expectations Despite Profit Decline​

Bank of America (BAC) posted a decline in quarterly earnings, despite beating expectations. The stock was up nearly 2% in pre-market trading.

UnitedHealth Revises Profit Forecast Following Cyberattack​

UnitedHealth (UNH) lowered its earnings expectations due to ongoing disruptions caused by a cyberattack. Stocks were down more than 3% in after-hours trading.

Johnson & Johnson Posts Profit but Cuts Annual Outlook​

Johnson & Johnson (JNJ) reported better-than-expected quarterly sales and earnings but reduced its annual profit forecast. Stocks were down about 1% in after-hours trading.

Walgreens Boots Alliance Confirms Adjusted Earnings​

Walgreens Boots Alliance (WBA) reported a quarterly loss of $3 billion despite beating adjusted profit and sales forecasts. Stocks rebounded more than 5% in pre-market trading.

Chinese Companies Fall as Beijing Reduces Stimulus​

Stocks of U.S.-listed Alibaba (BABA), PDD (PDD), and NIO (NIO) declined in pre-market trading, attributed to cooling interest in Beijing’s economic stimulus efforts.

Trump Media & Technology Rebounds After Recent Gains​

Stocks of Trump Media & Technology (DJT), parent company of Truth Social, rose in pre-market trading following an 18% gain on Monday. The rise is tied to the perception that Donald Trump holds a slight edge in the election, as well as a recovery from recent losses.

Energy Companies Retreat on Falling Oil Prices​

Stocks of Occidental Petroleum (OXY) and Diamondback Energy (FANG) were down in pre-market trading due to lower oil prices. Hopes are rising that Israel’s planned attack on Iran will not impact nuclear or oil facilities.

 

[OnEquity]

United Arab Emirates Approves First Dirham-Linked Stablecoin
AED Stablecoin Company announced that it has received the first approval from the UAE Central Bank to issue a dirham-backed stablecoin.
The United Arab Emirates (UAE) will soon see its first regulated stablecoin.
AED Stablecoin LLC has announced that it has received approval in principle from the UAE Central Bank to issue and establish its own dirham-linked stablecoin digital currency.
In a statement issued on Monday, the company described itself as a pioneer for obtaining permission to become the first authorized entity in the region to launch a stablecoin backed by reserves of the local currency. The authorization issued by the central bank falls under its framework for regulating payment token services, according to the statement.
Dubbed AE Coin, the new currency promises to revolutionize financial services by offering unprecedented stability, security, and efficiency, the statement continues.
“As a stable, regulated currency, it provides secure and seamless payment solutions while fostering the growth of the UAE’s digital economy,” the statement reads. Pegged to a fiat currency, AE Coin will be backed by “transparent reserves” of the dirham and subject to “regular audits,” the company assures.
The token will offer fast and low-cost transactions, with potential use for various purposes, including business-to-business payments, individual transactions, and investments. The stablecoin aims to foster economic growth and innovation in the UAE by providing a secure and efficient digital currency, the issuer said.
AED Stablecoin added that its token will offer additional features, such as integration with the decentralized finance ecosystem (DeFi), allowing users to make loans and credit transactions on decentralized platforms.
In addition, the ambitious roadmap includes integration with decentralized applications (dApps), listings on exchanges, and ongoing technological advancements. The company also stated its plans to form strategic partnerships and forge alliances with merchants to increase real-world use cases, making the coin more accessible for everyday transactions.
AE Coin is intended to support the UAE’s booming digital economy, enabling simpler and more secure payments that contribute to the country’s financial innovation.

Interest in Stablecoins Grows in the UAE​

The news comes at a time of global growth for stablecoins, a type of digital token built on blockchain technology that, unlike most cryptocurrencies, maintains a stable price, often with parity to a fiat currency such as the U.S. dollar.
Banks and other financial institutions in traditional finance have been actively exploring transactions with this class of tokens, as well as issuing their own stablecoins. Additionally, within the cryptocurrency industry, companies such as Ripple are working to advance this field.
Tether’s USDT dominates the stablecoin market, which is valued at more than $170 billion, with a current capitalization of $119 billion, according to CoinMarketCap data.
This development aligns with the UAE’s efforts to position itself as a global hub for cryptocurrency and Web3. Local regulators have been implementing regulatory policies that are more favorable to the new asset class. Dubai has introduced a sector-specific framework with a licensing system for digital currency exchanges.
Earlier this year, the UAE Central Bank’s board of directors approved a new system for overseeing and licensing stablecoins, raising concerns about potential restrictions on using cryptocurrencies other than authorized dirham-linked tokens as payment mechanisms.
A few days ago, UAE regulators removed VAT from cryptocurrency transactions.
Tether had already signaled its intention to launch a dirham-linked stablecoin when it announced a partnership in August with an Abu Dhabi-based company to advance these plans.

 

[OnEquity]

Dollar Gains on Cut in Rate Expectations, Pound Falls on Inflation
The U.S. dollar rose on Wednesday, trading near two-month highs on expectations that the Federal Reserve will slightly cut interest rates this year, while the pound slipped after positive inflation data.

Dollar Benefits from Expectations of a Rate Cut​

Recent data indicating a resilient economy, combined with slightly higher-than-expected inflation in September, has led market participants to reduce their bets on a sharp cut in U.S. interest rates.
Adding to these expectations on Tuesday were comments from Atlanta Fed President Raphael Bostic, who stated that he anticipated only one more interest rate cut of 25 basis points this year when he updated his forecast for last month’s Fed meeting.
Most market participants expect two more cuts this year, totaling 50 basis points, and traders are currently betting with a 92% probability on a 25-basis-point cut at the next Fed policy meeting on Nov. 7, with an 8% chance of no change, according to CME Group’s FedWatch tool.

Pound Falls After Inflation Release​

In Europe, GBP/USD fell 0.5% to 1.3003 after data revealed that U.K. inflation dipped more than expected in September, setting the stage for a possible rate cut in the coming month.
The U.K. inflation rate dropped to 1.7% year-over-year, down from an estimated 1.9% and from 2.2% the previous month.
This marks the first time it has fallen below the Bank of England’s 2% target since April 2021 and follows earlier data this week showing that U.K. wages grew at the slowest pace in more than two years.
“The data is unambiguously dovish for the Bank of England and paves the way for rate cuts at the remaining two meetings this year (November and December),” ING analysts stated in a note.
“Given Governor Andrew Bailey’s comments earlier this month suggesting that the BoE may accelerate the pace of easing, markets may start to consider the possibility of a 50-basis-point rate cut in November.”

EUR/USD Edges Lower Ahead of ECB Meeting​

EUR/USD was down 0.1% to 1.0882 ahead of Thursday’s European Central Bank (ECB) meeting.
The ECB has already cut rates twice this year, and financial markets have almost fully priced in a 3.5% deposit rate cut this week.
“EUR/USD is predominantly driven by external factors. The substantial drop in oil prices has reduced the potential for further downside from market influences, but we continue to believe that positioning ahead of the U.S. election may favor a weaker EUR/USD,” ING mentioned.

Yuan Softens Amid Weekly Losses​

USD/CNY fell slightly to 7.1179, with the yuan maintaining its losses for the week as sentiment worsened over China’s plans for more stimulus.
China’s Finance Ministry announced a series of fiscal measures to boost growth, although it did not provide specifics on the timing or scale of the estimated measures, raising uncertainty about their effectiveness.

USD/JPY Nears Resistance Level​

USD/JPY rose 0.2% to 149.43, approaching the resistance level of 150.
Consumer inflation data due later in the week is expected to provide more insight into the Bank of Japan’s plans regarding potential further rate hikes.

 

[OnEquity]

U.S. Stock Markets Steady After Tech Sector Losses, Earnings in Focus
U.S. equity markets stabilized on Wednesday after losses in technology stocks, driven by weak results from leading chipmaker ASML (ASML), pulled Wall Street away from its all-time highs.
Losses in the semiconductor sector hit Wall Street on Tuesday, with the NASDAQ Composite down nearly 1%, while both the S&P 500 and Dow Jones Industrial Average fell 0.8%, pulling back from their record highs.
The weakness followed semiconductor equipment maker ASML’s (ASML) decision to cut its full-year estimates due to weak demand for non-artificial intelligence chips. ASML’s stock dropped 16% on Tuesday and continued to decline in premarket trading on Wednesday.
Chipmakers were also rattled by reports that the U.S. government was considering limiting the sale of artificial intelligence-related chips to certain countries, a scenario that could hurt sales.
Nvidia (NVDA) fell 4.5%, while rivals AMD (AMD) and Intel (INTC) dropped about 5.2% and 3.3%, respectively.

Q3 Earnings Season Continues​

Third-quarter earnings season continues this week. More results are expected on Wednesday, with Morgan Stanley (MS) rounding out banking sector earnings, following positive results from Goldman Sachs (GS), Citigroup (C), and Bank of America (BAC).
Abbott Laboratories (ABT) and U.S. Bancorp (USB) will also report their earnings on Wednesday, while Netflix (NFLX) is set to release its figures on Thursday.
Next week, earnings season will ramp up with reports from several key tech companies, including Alphabet (GOOGL) and Tesla (TSLA).
Beyond earnings, investors are also focused on speeches from several Federal Reserve officials, amid increasing speculation that interest rates may fall at a slower-than-expected pace.

Oil Stabilizes After Losses​

Oil prices stabilized on Wednesday after recent sharp losses, as traders weighed signs of a potential easing of tensions in the Middle East and concerns about slowing demand growth from major oil exporter China.
Weak economic data from China has also added pressure, and both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) have revised their demand growth forecasts for the remainder of 2024 downward.

 

[OnEquity]

Today’s stocks to watch: ASML, Morgan Stanley and Novocure
Key points:

• Luxury stocks, including LVMH, suffer declines on challenging global markets
• Morgan Stanley’s earnings beat estimates, outperforming among stocks
• Novocure wins FDA approval, which boosts its shares considerably

LVMH faces challenges in global markets​

LVMH (MC): LVMH, owner of Louis Vuitton, reported disappointing results and said it faces challenges in most markets. The French company’s shares, as well as other European luxury stocks, declined sharply.

Morgan Stanley beats expectations with earnings​

Morgan Stanley (MS): The bank reported quarterly results that beat expectations, with outstanding growth in investment banking revenues. Morgan Stanley shares rose nearly 2.5% in pre-market trading, boosting investor confidence in its results.

Equifax, PPG Industries and Alcoa results​

Equifax (EFX), PPG Industries (PPG) and Alcoa (AA) are expected to release their results after the markets close in the U.S. Forecasts are focused on their performance, which could shape investors’ perception of the sector as a whole.

Asml and the fall of the semiconductor sector’s stocks​

ASML (ASML): The semiconductor equipment builder continues its slide, with its Amsterdam-listed stocks down around 4%. The fall adds to that of other global semiconductor stocks, such as TSMC and Tokyo Electron, which also showed unfavorable performance.

Intel and security concerns in China​

Intel (INTC): The Cybersecurity Association of China said Intel products sold in China should undergo a cybersecurity review, saying the U.S. manufacturer poses a threat to national security. This has resulted in a drop of about 1.5% in Intel stocks in the premarket.

Novocure celebrates the approval of its lung cancer treatment​

Novocure (NVCR): Novocure shares rose about a third in after-hours trading after the U.S. Food and Drug Administration cleared its Optune Lua portable lung cancer treatment. The clearance is a major step forward for the company and could strengthen its position in the market.

J.B. Hunt surprises with better-than-expected revenues​

J.B. Hunt (JBHT): Transportation and logistics company J.B. Hunt announced a drop in quarterly revenue, but less than analysts expected. As a result, the stock rose nearly 7% in the premarket on the back of a solid performance versus market expectations.

 

[OnEquity]

Elon Musk’s Tesla mobilizes 760 million in Bitcoin, raising fears of a massive liquidation
The cryptocurrency community is abuzz with rumors following Tesla’s transfer of a sizable portion of its Bitcoin (BTC) holdings. More than 11,500 BTC were transferred to wallets linked to the electric car giant to unknown addresses, raising concerns about a possible liquidation.

However, despite these transactions, there are no clear indications that Tesla intends to liquidate its assets. According to Arkham, the target wallets are newly created and not tied to any cryptocurrency exchange, suggesting that these moves could be strategic in nature.

Tesla sold Bitcoin on the OTC market?​

The BTC in play, valued at around $760 million, nearly emptied Tesla’s cryptocurrency reserves, leaving only around $8 in its original wallets. This activity comes on top of two years of minimal movements.

Throughout history, Tesla’s engagement with Bitcoin has experienced several ups and downs. Initially, after buying $1.5 billion in Bitcoin in 2020, the electric car company sold approximately 10% in early 2021.

By July 2022, it had moved about 75% of its remaining BTC as market values fell from their peak in November 2021.

Currently, Tesla remains the fourth largest Bitcoin holder among publicly traded U.S. companies. Only MicroStrategy and mining companies Marathon Digital Holdings and Riot Platforms hold more.

The nature of Tesla’s recent trading suggests that they may be preparing for an over-the-counter (OTC) transaction. However, others also see this development as not entirely bearish.

“There is no evidence yet that this is an OTC trade. Even if it was, that means someone else bought it, so it’s not all bearish. Who knows,” says Sir Doge of the Coin.

Tesla’s involvement with Bitcoin goes beyond buying and selling. In 2021, it accepted Bitcoin payments for its vehicles for a short period.

However, it reversed this decision two months later, citing the environmental impact of Bitcoin mining. Its CEO, Elon Musk, has indicated that Tesla could return to accepting Bitcoin if mining becomes more environmentally friendly.

Despite the market’s initial trepidation, the Bitcoin price is holding steady, currently at around $67,000. This resistance is supported by significant inflows into spot Bitcoin ETFs.

On the day Tesla moved its BTC, spot Bitcoin ETFs booked inflows totaling $371 million. BlackRock’s iShares Bitcoin Trust fund alone raised $288.84 million, indicating strong investor appetite.