Market News by OnEquity

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The Dollar Stabilizes and the Euro Recovers Positions
The U.S. dollar was able to stabilize on Tuesday, while the euro made attempts to recover from last session’s sharp losses.

Dollar Stable​

The U.S. dollar stabilized after last week’s sell-off in the wake of the Federal Reserve’s rate cut.

The Fed began its rate-cutting cycle with a sizable 50 basis point reduction, and right now, attention is focused on the extent to which the central bank’s further rate cuts this year will be implemented.

According to CME Group’s FedWatch tool, traders are betting on a 53% chance that the Fed will cut rates by another half a point at its next scheduled meeting in November.

Markets are likely to pay close attention to Tuesday’s comments from Fed Governor Michelle Bowman, who remains the lone dissenter regarding the magnitude of last week’s rate cuts.

Later today, this month’s Consumer Board confidence report will be released, although most attention will focus on the release of the Fed’s preferred inflation gauge, the core personal consumption expenditures, next Friday, for more insights.

Euro Recovers After Losing Ground​

In Europe, EUR/USD rose 0.2% to 1.135, attempting to recover after a near 0.5% drop overnight, following data released Monday that showed eurozone business activity contracted noticeably this month.

Germany, Europe’s largest economy, saw a deeper decline, while France, the second-largest economy, returned to contraction.

The European Central Bank cut rates for the second time this year at the beginning of last week, and further signs of economic weakness may increase the likelihood of another rate cut in October.

GBP/USD traded virtually flat at 1.3347, not far from the 2 1/2-year high reached last week after the Bank of England kept rates unchanged.

“We do not see GBP/USD positioning as particularly tense and, given the weaker dollar environment, the direction remains towards 1.35,” analysts at ING mentioned in a note.

Yuan Gains Ground on Stimulus News​

USD/CNY was down 0.2% at 7.0356, settling at its lowest level since May 2023, after the Chinese government announced a stimulus package, reviving hopes of an economic recovery in Asia’s largest economy.

USD/JPY advanced 0.6% to 144.51 after purchasing managers’ index data showed a continued decline in Japanese manufacturing activity, while the services sector continued to grow.

The Bank of Japan left interest rates unchanged last week and stated confidence that inflation and economic growth will rise steadily. AUD/USD fell 0.2% to 0.6825 after the Reserve Bank of Australia held interest rates as expected, while reiterating its decision to control persistent inflation.

 

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U.S. Stocks Rise, Boeing and Bowman Speech in Spotlight
U.S. equity markets rose on Tuesday, tracking near all-time highs, in anticipation of further signals from the Federal Reserve regarding interest rates.

Wall Street indexes rose slightly on Monday, with the S&P 500 and the Dow Jones Industrial Average setting new record highs at the close.

Fed Speeches and PCE Data Anticipated​

This week, attention is focused on several Federal Reserve officials’ speeches, particularly from Federal Reserve Chairman Jerome Powell, as markets seek further guidance on the central bank’s rate-cutting plans. Minneapolis Fed President Neel Kashkari indicated that the Fed might slow its pace of future rate cuts, while Atlanta Fed President Raphael Bostic stated that the economy is normalizing faster than expected. However, he dismissed the idea of rushing into further rate reductions.

Fed Governor Michelle Bowman’s speech at the Kentucky Bankers Association’s annual convention will also be closely watched, as she was the only dissenter on the size of the previous week’s rate cut. Last week, the Fed cut rates more than market estimates, signaling the start of an easing cycle that analysts believe could lead to a 125 basis point reduction by year-end. Investors are also awaiting Friday’s PCE price index release, which is expected to provide more clarity on inflation trends.

Boeing Offers Labor Agreement​

In the corporate sector, Boeing has offered a more favorable labor agreement to its 30,000 striking employees in the U.S. Pacific Northwest. However, the union has stated that it will not put the proposal to a vote. Boeing’s latest offer includes a 30% wage increase over four years, along with improved retirement benefits and a larger ratification bonus if the workers accept the offer by Friday.

Deere & Company shares fell pre-market after former President Donald Trump threatened the company with a 200% tariff if it relocates part of its production to Mexico. AutoZone and KB Home are also set to release their quarterly earnings later in the day.

Chinese Stimulus Boosts Crude Oil Prices​

Crude oil prices advanced on Tuesday, supported by monetary stimulus measures from major importer China and escalating tensions in the Middle East. Stimulus measures adopted by China fueled expectations of expanding demand for crude oil from the world’s largest importer.

On the other hand, the Israeli army announced that it had launched airstrikes against Hezbollah facilities in Lebanon on Monday, raising fears of a supply disruption from this oil-rich region and putting global markets on edge.

 

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Interest Rate Cut Drives Cryptocurrency Investment to $321 Million
Cryptocurrency investment products saw inflows of up to $321 million in the previous week, an increase that is related to the Federal Reserve’s interest rate cuts.

Bitcoin, continues to be the dominant asset, drawing the most investment attention, while altcoins remain the most important cryptocurrency direction in the market.

Bitcoin at the Forefront of Cryptocurrency Investment Inflows​

Digital asset investment products recorded another round of inflows, with Bitcoin leading the way, capturing $284 million. This increase also led to inflows from Bitcoin investment products intended for the short term. According to the latest CoinShares report, the Federal Reserve’s decision to cut interest rates by nearly 50 basis points last week played a vital role in driving these inflows. At the regional level, the U.S. led inflows, potentially contributing $277 million to the total value. This reaction to the Fed’s rate cut highlights the growing impact of monetary policy on crypto investments.

Ethereum, on the other hand, recorded its fifth straight week of outflows, totaling $28.5 million the previous week. CoinShares attributes this to Grayscale’s continued outflows along with the performance of Ethereum ETFs. Ethereum ETFs have struggled, with cumulative net outflows reaching $607.47 million. On September 20, the Grayscale Ethereum ETF (ETHE) reported $2.77 billion in cumulative net outflows, although other issuers, including the Grayscale ETH Mini ETF, notched positive flows.

In contrast, Bitcoin ETFs are registering strong demand, continuing to provide institutional-level investors with access to Bitcoin. According to Sosovalue data, cumulative net inflows reached $17.69 billion as of September 20, with all issuers reporting flows in the green, except for Grayscale’s GBTC, which reported about $20.07 billion in outflows.

Bitcoin Capital Rotation Heading to Altcoins​

While Bitcoin continues to see increasing demand, the much-ballyhooed altcoin season continues to lag as capital has failed to flow to smaller market cap coins. Institutional investors and Wall Street players have played a significant role in driving demand for Bitcoin, particularly after the approval of Bitcoin ETFs earlier this year. As a result, Bitcoin has slowed the capital rotation into altcoins, putting the long-awaited altcoin rally on hold.

The anticipated “altseason” remains delayed. This phase is typically when investing in altcoins provides better returns than Ethereum or Bitcoin. According to the Altcoin Season Index, the market continues to be in a Bitcoin season, with a score of 33/100. This means that Bitcoin continues to dominate, even though altcoins are slowly gaining ground.

 

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Dollar declines; euro approaches multi-month highs
The U.S. dollar weakened on Wednesday, adding to last session’s losses, and the euro benefited from signs of economic weakness in the eurozone.

The dollar continues to fall​

The U.S. dollar has suffered for its friends after the Federal Reserve began its rate-cutting cycle with a sizable 50 basis point reduction earlier this month.

Data released Tuesday indicated that U.S. consumer confidence unexpectedly fell in September, raising concerns about further growth in the world’s largest economy, especially as the labor market shows signs of contraction.

“In a surprise move yesterday, U.S. consumer confidence was much weaker than expected,” mentioned analysts at ING, in a note. “The market is very sensitive to this issue, as the U.S. consumer has been so resilient for so long.”

Markets right now estimate the probability of a 50 basis point rate cut at the Fed’s next policy meeting in November at 59.5%, up from 37% a week ago, according to CME’s FedWatch tool.

Euro looks set to touch 13-month highs​

In Europe, EUR/USD rose 0.1% to 1.1188 and neared 13-month highs achieved the previous month. The euro benefited from dollar weakness, even with data pointing to economic weakness in the eurozone.

“There is very little on the European calendar today, so EUR/USD is likely to move range-bound. But the fact that EUR/USD is holding above 1.1100 is encouraging for modest EUR/USD bulls like us,” added ING.

GBP/USD was down 0.1% at 1.3394, retreating from levels not seen since March 2022.

Sterling has been able to garner support as the Bank of England is thought unlikely to be as aggressive with its rate cuts this 2024 when compared to the Federal Reserve.

Yuan nears record highs​

USD/CNY was down 0.1% to 7.0238, approaching its lowest level since May 2023, after Beijing reported a series of stimulus measures on Tuesday, including a cut in banks’ reserve requirements, as well as lowering mortgage rates.

USD/JPY rose to 143.81, while AUD/USD fell 0.2% to 0.6878, barely below a 19-month high after last session’s sharp rise.

Consumer price index data released on Wednesday revealed that inflation fell in August to a three-year low, although the decline in core inflation was less marked.

The Reserve Bank of Australia held interest rates steady on Tuesday and noted that while it expected inflation to fall in the near term, it only estimated that price pressures would steadily reach its target range in 2026.

 

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U.S. stock markets fall; Federal Reserve spokespersons in the focus of attention
U.S. stocks and stock indices fell slightly on Wednesday, consolidating from record highs, with eyes on upcoming signals on the Federal Reserve and interest rates.

The S&P 500 and the Dow Jones Industrial Average hit record highs on Tuesday, continuing the optimism triggered by the Fed’s interest rate cut the previous week.

Powell speech and PCE data in focus​

However, sentiment took a hit after a Conference Board report revealed that U.S. consumer confidence unexpectedly fell in September as a result of concerns about the labor market.

In the coming days, several Federal Reserve officials will have their say in the coming days, most notably Jerome Powell, the chairman, on Thursday and are likely to give further signals on the bank’s plans to cut interest rates.

Fed Governor Adriana Kugler will be in the spotlight on Wednesday.

On Tuesday, Fed Governor Michelle Bowman defended her stance of voting against a super-large cut of about 50 basis points in interest rates and instead supporting a traditional quarter-percentage-point reduction, noting that key inflation readings remain uncomfortably above the Fed’s target level.

The Fed cut rates by 50 basis points the previous week and announced the start of an easing cycle, which analysts estimate could reduce rates by about 125 basis points this year.

Friday will bring data on the PCE price index, the Fed’s favorite inflation gauge, which will most likely influence the bank’s plans for interest rates.

Nvidia cools off after strong session​

Stocks of Nvidia (NVDA), the largest artificial intelligence company, were down 0.0% premarket, after rising more than 3% on Tuesday.

The stock was supported primarily by news that CEO Jensen Huang had completed the sale of Nvidia shares after doing so for more than $700 million under a trading plan.

Huang’s share sale may have dented confidence in the company, even more so after quarterly results failed to meet estimates and delays in its advanced artificial intelligence chips.

Crude oil falls​

Crude oil prices fell on Wednesday as traders reassessed the effect of new monetary stimulus measures from major importer China. On Tuesday, both benchmarks were up just under 2% after China unveiled its new stimulus measures. However, traders have noted that more help may be needed to boost economic expectations in the world’s largest crude importer, Reuters reports.

The decline in U.S. crude stockpiles provided some support to the market, as data from the American Petroleum Institute indicated on Tuesday that crude inventories fell by 4.34 million barrels the previous week. Official figures from the Energy Information Administration will be released at a later date.

 

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SEC Delays Decision on Spot Ethereum ETF Trading Options
The U.S. Securities and Exchange Commission (SEC) has postponed its decision on approving a rule change to allow options trading in Ethereum exchange-traded funds. In a filing on Tuesday, the SEC announced it was extending the deadline for its decision on Nasdaq ISE’s proposal to list and trade options on the BlackRock iShares Ethereum Trust, also known as ETHA. The new deadlines are set for November 10 for Nasdaq ISE and November 11 for NYSE American LLC.

Both BlackRock and Nasdaq submitted filings on August 6, proposing rule modifications to list and trade options for ETHA. The proposal seeks to broaden investor access and provide a low-cost investment vehicle for exposure to Ethereum. Following Nasdaq’s filing, NYSE American submitted a proposal to list options for Ethereum ETFs managed by Grayscale and Bitwise.

On September 20, the SEC cleared options trading for BlackRock’s iShares Bitcoin Trust (IBIT) fund, a significant milestone for spot Bitcoin ETFs. According to Bloomberg ETF analyst Eric Balchunas, this clearance is a “big win” for Bitcoin ETFs, as it is expected to bring greater liquidity and attract more investors.

The SEC’s approval of U.S.-listed Bitcoin ETFs has led to increased demand for cryptocurrency investment products, driven by growing interest from both retail and institutional investors. The number of investment vehicles offering direct and indirect exposure to cryptocurrency assets continues to rise.

Recently, Grayscale expanded its cryptocurrency trust products to include assets such as Sui, Bittensor, Avalanche, and Ripple.

 

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Dollar stabilizes before Powell’s speech and payrolls data
The U.S. dollar stabilized on Monday as market traders await Federal Reserve Chairman Jerome Powell’s speech later in the day ahead of Friday’s key jobs report.

Dollar on Payrolls Watch​

The U.S. dollar lost ground the previous week after the Federal Reserve’s preferred inflation readings signaled that price pressures continue to ease, shortly after the Fed began its rate cut.

Fed Chairman Jerome Powell was scheduled to speak Monday to the National Association for Business Economics in Nashville, Tennessee, and is expected to elaborate on the Fed’s decision to cut its benchmark interest rate by half a percentage point earlier this month.

A survey by the group of forecasters released Sunday cited a monetary policy error as the biggest downside risk and danger to the U.S. economy over the next 12 months.

One relevant piece of data that could guide the pace of U.S. interest rate cuts comes Friday with the October nonfarm payrolls report, for which economists expect the U.S. economy to have added about 144,000 jobs.

“The Fed’s increased focus on the employment side of its mandate means high market sensitivity to the details of the release,” mentioned analysts at ING, in a note. “If we are correct with our forecast for a rise in unemployment, we estimate a weaker dollar as markets cling to expectations of a half-point Fed cut in November or December.”

Euro readies for inflation release.​

In Europe, EUR/USD rose 0.1% to 1.1172, and was flat ahead of September inflation data due on Tuesday, which may be heavily relied upon by European Central Bank policymakers to determine whether to cut rates again in October.

The German inflation figures will be released ahead of those for the eurozone, and follow data from the previous week that indicated inflation in both France and Spain rose less than expected, raising expectations for an October rate cut by the ECB. “If we end the week with slower than expected eurozone inflation and somewhat weaker US payrolls numbers supporting a 50 basis point Fed cut, then expect the euro to be one of the laggards in an environment of dollar weakness as markets consolidate bets that the ECB will continue to cut in October,” ING mentioned.

“Another short-term move to 1.1200 is possible in EUR/USD on the back of USD weakness, but unless we see surprisingly strong Eurozone inflation, a big breakout to the upside may not be in the cards.”

Meanwhile, GBP/USD rose 0.2% to 1.3399, near the previous week’s high of 1.3430, and reached a level not seen since early 2022.

Data released on lines revealed that the U.K. economy grew more slowly than previously thought during the second quarter, as gross domestic product expanded by about 0.5% in the period from April through June.

The reading was slightly below the preliminary estimate of 0.6%, and came in below forecasts for another 0.6% increase.

Yen loses some of its gains​

USD/JPY rose 0.2% to 142.44. The Japanese yen lost some of the previous week’s gains as the country’s new prime minister indicated that monetary policy should remain accommodative.

The yen surged on Friday as Shigeru Ishiba, a former defense minister and longtime critic of accommodative monetary policy, emerged as the leader of the ruling Liberal Democratic Party. Elsewhere, Japanese industrial production fell by 3.3% m-o-m in August, and housing starts fell by 5.1% y-o-y. USD/CNY rose to 7.0120, stabilizing after Beijing’s series of stimulus measures prompted a rally in the Chinese yuan the previous week to break below the psychological 7 per dollar barrier on Friday.

 

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U.S. stock markets down slightly; Powell speech in spotlight
U.S. stocks declined on Monday, although September will turn out to be a positive month, as investors are looking for signals from Federal Reserve Chairman Jerome Powell regarding future interest rate cuts.

It is possible that the last trading day of the month will start on a slightly bearish note, although the Fed’s decision to cut interest rates by 50 basis points means that September is on track to be a positive month, even though it has been the most difficult month in history for the stock market.

The Dow Jones index has gained nearly 1.8% so far in September, ending Friday’s session at new all-time highs, and the S&P 500 index rose 1.6% while the tech-heavy Nasdaq advanced nearly 2.3% for the month.

Powell ready to talk​

This optimism is based on the fact that investors expect the Federal Reserve to make another sharp 50 basis point interest rate cut at its next meeting due to easing price pressures coupled with weakening demand for labor.

With all of this in mind, traders focus their attention on comments on Powell’s estimates for the economy at the National Association for Business Economics annual meeting in Tennessee later in the session.

Additionally, the week ends with the release of the October nonfarm payrolls report next Friday and economists expect the U.S. economy to have added 144,000 jobs.

Investors are anxious to see whether the jobs data will support estimates of a soft landing scenario, in which the Fed can moderate inflation without significantly affecting growth, or revive fears of a possible recession.

Stellantis cuts its year-over-year forecast​

On the corporate side, Carnival (CCL) will release its quarterly results on Monday, as the third quarter comes to a close.

On the other hand, shares of Stellantis (STLA) plunged more than 10% before the market opened after the auto giant, known for brands such as Dodge, Jeep and Chrysler, slashed its full-year guidance and announced it will spend more cash than it thought, citing worsening trends in the sector, higher costs to overhaul its U.S. business along with competition from electric vehicles in China.

Consumer Discretionary is the best performing sector in the S&P 500 in September, up 7.3% for the month.

It was followed by the utilities sector, up nearly 6%.

The financials, energy and healthcare sectors all declined this month.

Oil rises on escalating Israeli attacks​

Oil prices rose on Monday on the prospect of conflict in the Middle East, as Israel stepped up its attacks on Iranian-backed Hezbollah and Houthi militant groups.

Israel claimed to have bombed Houthi targets in Yemen on Sunday, just days after killing Hezbollah leader Sayyed Hassan Nasrallah in an escalation of the conflict in Lebanon.

Oil prices fell last week on demand as fiscal stimulus from China, the world’s second largest economy and top oil importer, failed to calm market confidence.

 

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U.S. stock markets down; JOLTS, ISM in spotlight
U.S. stocks were largely lower on Tuesday as investors continued to digest and analyze comments made by Federal Reserve Chairman Jerome Powell ahead of a series of crucial data releases.

The Dow Jones index along with the S&P 500 index scored record highs at the close of trading on Monday, as the Federal Reserve’s decision to cut interest rates by nearly 50 basis points at the beginning of the month turned into a very positive month that has historically been the most difficult for the stock market.

All three major Wall Street averages advanced during both the month of September and the third quarter, the first positive September for S&P 500 on record since 2019.

The S&P 500 is up more than 20% this year right now, the first time since 1997 that the benchmark index has posted a gain of 20% or more during the first nine months of the year.

Jerome Powell halts expectations of major cuts.​

The start of the new month, has for Wall Street been on the back foot after Fed Chairman Jerome Powell curbed expectations around another sharp rate cut this month, alluding that the committee does not feel “like it’s in a hurry to cut rates quickly” and that the process of reducing the federal funds rate “will unfold over time.”

Goldman Sachs strategists mentioned that they view Powell’s comments “as consistent with our forecast for 25 basis point cuts in November and December.” “We continue to view the choice between 25bp and 50bp in November as a close one,” they added.

The Fed began its policy shift the previous month with a 50bp rate cut, marking the first recorded reduction since 2020.

Heavy slate of economic data​

There is still more U.S. economic data to study as investors are on the lookout for more signals on how the Fed is approaching more potential rate cuts this year.

The closely watched JOLTS (Job Openings and Labor Turnover Survey) report is expected to reveal that 7.640 million jobs were available in August.

Investors will also analyze the week’s September reading of the Institute for Supply Management’s manufacturing and services purchasing managers’ indexes as they look for new signals regarding the momentum of the U.S. economy.

The week ends with the release of the October nonfarm payrolls report on Friday, and economists expect the U.S. economy to have added 14,000 jobs.

CVS Health reviews its options​

On the corporate side, shares of CVS Health (CVS) rose more than 2% before the markets opened after Reuters reported that the company is analyzing options that bring the separation of its retail and insurance divisions.

The news agency, citing people familiar with the matter, said CVS Health has been discussing various options, including the process of a split, with its financial advisors in recent weeks.

Oil prices on the lookout for Gaza cease-fire talks​

Oil prices were down sharply on Tuesday, as concerns about tepid demand growth countered fears that escalating tensions in the Middle East could affect supply around the world.

Israel reported early Tuesday that its troops had begun “limited” raids against Hezbollah targets in the Lebanese border area, a move that risks aggravating a conflict in the oil-rich Middle East that threatens to engulf Iran and the United States.

The impact has been limited, however, as the sharp drop in Chinese manufacturing activity in September indicates a slowdown in future demand from the world’s largest importer of crude oil.

The industry group American Petroleum Institute will release its weekly estimate of U.S. crude oil and fuel stocks for the week ending September 27.

 

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Ripple obtains preliminary license to operate in Dubai
Ripple reported on October 1 that the blockchain company has achieved another regulatory milestone in the United Arab Emirates.

Specifically, the Dubai Financial Services Authority (DFSA) has granted Ripple preliminary approval, allowing the company to expand its services and strengthen its presence in the UAE and the Middle East in general.

The approval means Ripple can now provide its services elsewhere in the country, expanding its presence from the Dubai International Financial Centre (DIFC).

“This is a pivotal moment for Ripple’s operations in the Middle East. The DFSA is a world-renowned independent regulator with a rigorous regulatory process and we are delighted to have received its preliminary approval,” said Reece Merrick, Ripple’s managing director for the Middle East and Africa, in a statement.

According to Merrick, more than 20% of Ripple’s global user base is in the UAE, and the expansion will enable it to bring products and services to an increasing number of individuals and businesses. Among the key innovations will be Ripple’s cross-border payment solutions offering, including the Ripple Payments Direct, or RPD, service.

Ripple’s regulatory compliance​

This achievement puts Ripple, the company behind the XRP cryptocurrency , on track to be the first blockchain-based payments provider to be licensed by the DFSA. The UAE is Ripple’s regional headquarters in the MENA region and South Asia, which the company founded in Dubai in 2020.

But in addition to regulatory compliance in the UAE, along with this new license in principle, Ripple has further traction in this pursuit.

The company has obtained more than 55 licenses in various jurisdictions around the world, including the New York Department of Financial Services (NYDFS), the Monetary Authority of Singapore (MAS) and the Central Bank of Ireland (CBI).

 

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Dollar Benefits from Safe-Haven Status Amid Middle East Tensions
The U.S. dollar rose on Wednesday, benefiting from its safe-haven status and building on the strong gains from the previous session. This came after a missile attack by Iran on Israel, which further escalated tensions in the region.

Dollar Rises Amid Middle East Escalation​

The turmoil in the Middle East intensified overnight, with Iran launching ballistic missiles at Israel in retaliation for the recent assassination of Iranian-backed Hezbollah leader Hassan Nasrallah and Israel’s ground deployment in Lebanon. Iran has reported that its attack is complete unless further provocations occur. However, Israel has promised a response, raising concerns that the United States, one of Israel’s closest allies, could become involved in the regional tensions.

“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.,” analysts at ING said in a note.

The dollar was also supported on Tuesday by better-than-expected U.S. job openings data, especially as markets await the official monthly jobs report due on Friday.

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

The ADP nonfarm employment report for September is due to 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 payrolls hikes; euro eases on weak data
The U.S. dollar stabilized on Monday, holding on to the gains seen after Friday’s strong jobs report, at the start of a week that brings the release of key inflation data, as well as minutes from the Federal Reserve’s latest meeting.

Payrolls help boost the dollar​

The growth in U.S. payrolls ended fears of a slowdown in the U.S. economy and served to reinforce the notion that the Federal Reserve will not need to cut interest rates sharply to sustain the economy, which served to boost the dollar.

According to the Fedwacth tool, traders largely dismissed bets on a further 50 basis point cut at the next Fed meeting and estimated the option of a 25 basis point cut at more than 90%.

This week, the focus will be on speeches by several Fed officials, inflation data and the minutes of the September meeting. The Fed cut rates by about 50 basis points at the meeting and signaled the beginning of an easing cycle, although it continues to say that future rate cuts will be data dependent.

Analysts at ING say in a note 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 no longer have an excuse to look through Fed Chair Jerome Powell’s pushback against the 50 basis point cuts, and are now finally aligned with the Dot Plot projections: 25bp cuts in November and December.”

The dollar, sheltering second, has similarly received a boost from the turmoil in the Middle East, with Israel carrying out bombing raids against Hezbollah targets in Lebanon and the Gaza Strip on Sunday, ahead of Monday’s one-year anniversary of the October 7 attacks that kicked off the war.

Weak German data hits the euro​

In Europe, the EUR/USD, down 0.1% at 1.0965, and the euro weakened after German factory orders fell about 5.8% on month in August, another example of the economic difficulties facing the largest economy in the eurozone.

ECB chief economist Philip Lane, as well as 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 Friday that the central bank should only gradually cut interest rates, a day after it said Governor Andrew Bailey may move more aggressively to reduce borrowing costs.

Questions about 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.

 

[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 moved to all-time highs on Wall Street last session ahead of some major company data.

The major indexes posted solid gains on Monday, supported by strong gains in major technology vlores, with market favorite Nvidia (NVDA) rising to an all-time high, coming close to replacing iPhone maker Apple (AAOL) as the world’s most valuable company.

The S&P 500 rose 0.8% to an all-time high, the Dow Jones Industrial Average rose 0.5% to an all-time high above 43,000 points, while the NASDAQ Composite rose 0.9% again, close to the all-time highs achieved earlier in the year.

In addition to technology gains, stock markets were also boosted 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) will report their results on Tuesday, as will Johnson & Johnson (JNJ), United Airlines (UAL), Unitedhealth (UNH) and Walgreens Boots Alliance (WBA).

Morgan Stanley (MS) rounds out bank earnings on Wednesday, while Netflix (NFLX), Blackstone (BX) and American Express (AXP) will release results later in the week.

Investors will be watching to see if company earnings persevere despite the backdrop of pressure from high interest rates and sticky inflation.

This week, aside from earnings, attention will focus on retail sales data, as well as speeches from a number of Federal Reserve officials, looking for more signals on the economy along with interest rates.

Oil prices fall on demand fears​

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

These fears were compounded by the Organization of the Petroleum Exporting Countries cutting its crude oil demand expectations for the third successive month.

Oil prices were also influenced by the risk premium that traders discounted on Monday’s news that Israel will not attack Iran’s oil and nuclear facilities. Such an attack would escalate the conflict and alarm investors about a supply disruption from the oil-rich region.

 

[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.

 

[OnEquity]

Dollar Gains on Cut in Rate Expectations, Pound Falls on Inflation
The U.S. dollar rose Monday, maintaining its recent strength as the election for U.S. president approaches and polls point to a growing likelihood that former President Donald Trump will be the winner.

Dollar Boosted by Confidence in Trump​

The dollar remained near its highest levels in over two months, bolstered by growing confidence that U.S. interest rates will decrease at a slower pace than initially expected. This is further supported by recent data showing that the U.S. economy remains healthy.

According to the CME FedWatch tool, traders are largely expecting a 25 basis point rate cut by the Federal Reserve in November.

The dollar has also been buoyed by increasing expectations that Donald Trump will defeat Kamala Harris in the 2024 presidential election, now less than two weeks away.

It is considered possible that the tariff and tax policies proposed by Republican candidate Donald Trump could keep U.S. interest rates high and apply downward pressure on the currencies of trading partners.

“Currency markets appear to be positioning for a Trump victory in next month’s U.S. presidential election. October seems to have been a good month for Donald Trump in opinion polls, and the dollar is rising across the board,” ING analysts mentioned in a note.

Euro Hit by Weaker PPI in Germany​

In Europe, EUR/USD was down about 0.1%, trading at 1.0850, after German producer prices fell more than expected in September, declining by 1.4% year-over-year instead of the estimated 1.0%.

European Central Bank policymakers are likely to cut the policy rate to a neutral level between 2% and 3%, although further cuts may be necessary if inflation continues to fall, ECB policymaker Gediminas Simkus mentioned on Monday.

“If disinflation processes take hold… it is possible that rates will be lower than the neutral level,” Simkus, governor of the Lithuanian central bank, told reporters in Vilnius.
GBP/USD fell 0.2%, reaching 1.3022, after data revealed that British property sales prices rose just 0.3% during October, well below the average monthly increase of 1.3%, according to property website Rightmove (RTMVY).

This, coupled with the unexpected drop in services inflation last week, signals that further rate cuts by the Bank of England are likely in the coming months, as the bank seeks to stimulate the U.K. economy.

Yuan Declines After PBoC Rate Cut​

USD/CNY rose 0.2% to 7.1120 after the People’s Bank of China cut its benchmark lending rate by 25 basis points.

Over the past month, China has announced its most aggressive round of stimulus measures, including monetary and fiscal policies aimed at boosting sluggish growth.
USD/JPY rose about 0.3%, reaching 149.91, though it remained below the 150 level after briefly surpassing it the previous week for the first time since early August.

 

[OnEquity]

U.S. Stock Markets Plummet Amid a Flood of Third-Quarter Results
U.S. equity markets and stock indices were slightly lower on Monday, consolidating near record levels, with attention focused on a series of key results from the technology sector.

Positive results from banks and technology companies in the previous week had driven several of Wall Street’s major indices to record highs, with the S&P 500 and the Dow Jones both posting record highs on Friday. This marked a sixth straight week of gains, the best streak of the year for both indices.

However, momentum appears to be stalling somewhat, as anticipation of both the upcoming Federal Reserve meeting and the tight U.S. presidential election keeps investors cautious. High valuations for U.S. equities have also increased the likelihood of near-term losses.

Key Tech Results of the Week​

Tesla (TSLA) will be the most prominent company reporting results this week, with the electric car maker’s earnings under the spotlight following its disappointing robotaxi unveiling earlier this month.

Tesla also missed expectations for third-quarter deliveries, which is expected to weigh on its quarterly earnings when it reports on Wednesday.

Several chipmakers will also release results this week. ASML (ASML) and TSMC (TSM), two key players in the sector, gave mixed signals regarding demand. Texas Instruments (TXN), Western Digital Corporation (WDC), and Lam Research Corp (LRCX) are among the relevant stocks reporting, while in the broader technology sector, IBM (IBM) will also announce its results this week.

Outside the technology sector, this week will feature earnings reports from major defense companies, including RTX Corp (RTX), Lockheed Martin (LMT), L3Harris Technologies (LHX), General Dynamics (GD), and Northrop Grumman (NOC).

Telecommunications giants T-Mobile US (TMUS), Verizon Communications (VZ), and AT&T (T) are also set to report earnings.

Aircraft manufacturer Boeing (NYSE) will report its results on Wednesday, with a particular focus on its cash position as the company faces its first significant strike in over a decade.

A Quiet Week for Economic Data​

It will be a relatively quiet week on the U.S. economic calendar, although investors will receive updates on the housing sector with reports on new and existing home sales. Additionally, durable goods orders, consumer confidence, and initial jobless claims will be released.

On Wednesday, the Federal Reserve will release its Beige Book, a report on economic conditions across the central bank’s 12 districts.

Market participants will also hear from several regional Federal Reserve officials throughout the week, including Minneapolis Fed President Neel Kashkari, Kansas City Fed President Jeffrey Schmid, San Francisco Fed President Mary Daly, Philadelphia Fed President Patrick Harker, and Richmond Fed President Thomas Barkin.

Oil Shows Signs of Rebounding​

Oil prices rose on Monday, recovering from last week’s steep losses, as energy traders weighed concerns over weak demand from major importer China and the evolving conflict in the Middle East.

Data released on Friday indicated that China’s economy grew in the third quarter at the slowest pace since early 2023, although September consumption and industrial production exceeded forecasts.

Uncertainty remains over how the conflict in the Middle East will develop and whether it will significantly impact oil supply in the region.

 

[OnEquity]

Market Highlights for the Week: Tesla, IMF, and Oil
Tesla will be the first of the “Magnificent Seven” to report in the corporate earnings season. Global financial leaders will meet in Washington, and oil prices remain volatile. Here’s a look at what’s happening in the markets this week.

Tesla Reports Its Results​

As earnings season picks up momentum, Tesla (TSLA) will be one of the first major U.S. tech companies to release its results, which are expected on Wednesday after the close of the trading session.

Tesla’s stock has faced losses this month following the unveiling of its eagerly awaited robotaxis, which left some investors disappointed due to the lack of precise details. So far, Tesla shares have underperformed the S&P 500 Index (SPY), with a loss of approximately 11%, compared to the index’s 22.5% gain.

While investors have become more optimistic about the U.S. economy, thanks to strong jobs reports and the Fed’s 50 basis point cut last month, a weak earnings report from Tesla could reignite concerns about the valuations of tech stocks.

Elevated valuations— the S&P 500 trades at nearly 22 times forward earnings—combined with high corporate earnings forecasts and potential volatility from the upcoming U.S. presidential election could leave stocks vulnerable to a correction.

Gains in Semiconductors​

This week, corporate earnings will take center stage, with results from Texas Instruments (TXN) and equipment company Lam Research (LRCX) being closely watched after a volatile week for the semiconductor sector.

Chip stocks fell on Tuesday after Europe’s largest tech company, ASML (ASML), forecasted lower-than-expected sales and bookings for 2025. However, the sector bounced back on Thursday after TSMC (TSM), a key producer of advanced chips used in artificial intelligence, announced a 54% increase in quarterly profit, surpassing expectations.

Semiconductor and related equipment stocks account for 11.5% of the S&P 500’s total weight.

Other companies reporting earnings next week include Coca-Cola (KO), IBM (IBM), General Motors (GM), and Verizon (VZ).

U.S. Economic Data​

A relatively quiet week is expected on the U.S. economic calendar. However, investors will get updates on the housing sector through new and existing home sales reports. Additional data releases include durable goods orders, consumer confidence, and initial jobless claims.

On Wednesday, the Federal Reserve will release its Beige Book, a report on economic conditions across the central bank’s 12 districts.

Market participants will also have the opportunity to hear from several Fed officials throughout the week, including Minneapolis Fed President Neel Kashkari, Kansas City Fed President Jeffrey Schmid, San Francisco Fed President Mary Daly, Philadelphia Fed President Patrick Harker, and Richmond Fed President Thomas Barkin.

IMF Meetings​

Central bank chiefs and finance ministers from around the world will gather in Washington starting Monday for the annual meetings of the International Monetary Fund (IMF) and the World Bank. They will discuss how countries can navigate an environment of low growth and high indebtedness.

Last week, the IMF warned that global public debt is estimated to exceed $100 trillion by the end of this year, driven by the United States and China.

The IMF noted that high debt levels could provoke adverse market reactions and limit countries’ ability to respond to economic shocks.

Meanwhile, Russian President Vladimir Putin will host a summit of BRICS group leaders starting Tuesday, as the Kremlin seeks support in its confrontation with the West. Russia says that leaders from Brazil, India, China, South Africa, Egypt, the United Arab Emirates, and Saudi Arabia—who collectively account for a third of global economic output—will attend.

Oil Prices​

Oil prices remain under pressure after a roughly 7% decline last week, as energy traders assess weak demand from major importer China and the ongoing conflict in the Middle East.

Data released on Friday showed that China’s economy grew at its slowest pace since early 2023 in the third quarter, although September consumption and industrial production beat estimates.

Analysts noted that economic weakness in China, coupled with the shift toward electric vehicles, is dampening demand prospects for oil.

At the same time, uncertainty persists over how the Middle East conflict will evolve. U.S. President Joe Biden said on Friday that there is a possibility of a deal between Israel and Iran that could temporarily end the conflict in the region.

However, the Lebanese militant group Hezbollah stated on Friday that it was entering a new phase of escalation in its fight against Israeli troops, dashing hopes that the death of Hamas leader Yahya Sinwar would lead to an end to the war.