Indices: Record Highs Again but This Time It’s Somewhat Lonely at the Top for the Tech Sector
– US equity index futures are mixed and follows another session of gains and record highs for the (+0.2% to 6,890), (+0.3% to 47,706), but more so the tech-heavy (+0.7% to 26,012) as the tech sector massively outperformed in a session where most sectors finished lower, with the AI trade still in play as market participants await the expected 25bp tonight and earnings from a few of Big Tech; Treasury yields edge lower again, and market pricing (CME’s FedWatch) pretty much fully pricing in a rate cut out of the Fed today and not far off doing so for another 25bp reduction in December, while January remains an ongoing coin toss on whether it’ll reach 3.25-3.5%; U.S. President Trump expects lower tariffs on China and that “we are going to have a great meeting with China’s Xi”; Senator Schumer sees government shutdown extending into November
– Asia this morning sees Japan’s (+2%) enjoying another record high breaching 51,000 as it tracks Wall Street higher and especially its AI-related components, and has trade optimism as an added factor ahead of rate decisions out of both the Fed and BoJ
Stocks: Nvidia and Nokia??
– Shares of Nvidia (NASDAQ:) jump 5% following its announcements at the GTC conference including taking a $1bn stake in Nokia (+20.9%)
– Tesla (NASDAQ:) shares close 1.8% higher even as it suffers a sales drop in Europe, but among Big Tech (aside from Nvidia above) Microsoft (NASDAQ:) e
– Shares of Qualcomm (NASDAQ:) fall back 3.5%, undoing some of Monday’s gains when it was announced it’ll develop AI chips to compete with the heavyweights
– Skyworks Solutions (NASDAQ:) up 5.8% by the close after a deal to buy rival Qorvo (+5.7%)
– Meme stock movers: Beyond Meat (NASDAQ:) (+9.1%), Krispy Kreme (-2.9%), Opendoor (-2.3%
– Crypto pullback sees crypto stocks suffer a red session: Coinbase (-1.7%), Mic
– Earnings:
o Unitedhealth (NYSE:): beats on earnings and slightly on revenue too; shares up 0.5% by the close
o BNP Paribas: beats on revenue but slight miss on net income, and raises loan-loss provisions; shares close 3.5% lower
o PayPal (NASDAQ:): beats on earnings and initiates a quarterly dividend; shares up 4%
o Regeneron Pharmaceuticals (NASDAQ:): beats on both earnings and revenue; shares jump 11.8%
o SK Hynix: record quarterly revenue and profit with both roughly in line with estimates but offers a bullish outlook; shares up over 4% this morning
Commodities: Gold Below $4K Ahead of FOMC, WTI Below $60 on Sanctions Leeway
– continue to feel the heat even if recovering off $3,880s lows yesterday ahead of both FOMC rate cut today and the expected US-China deal tomorrow, but fared better this time around helping take the gold/silver ratio below 84
– (WTI) suffer a notable red session sliding back beneath $60 as some leeway given to Germany regarding sanctions on Russia’s Rosneft, even as API’s weekly energy inventory readings show sizable drawdowns for oil (-4m barrels), gasoline (-6.3m) and distillate (-4.4m)
FX/Central Banks/Crypto: Not Ruling Out JPY and AUD Just Yet
– Further losses for reaching $112K albeit still relatively limited and within its short-term (but early and wide) bull channel ahead of the FOMC meeting while struggles more briefly breaking beneath $4K
– sticks to the 98s ahead of the anticipated FOMC rate cut; climbs following hotter Australian data (see Data below);
– European Central Bank in its consumer expectation survey shows 1Y CPI 2.7% (from 2.8%), 3Y 2.5% (unchanged), and 5Y 2.2% (also unchanged); bank lending survey shows banks tightened corporate credit access on trade risks
– Treasury Secretary Bessent urges the Japanese government to give the Bank of Japan “policy space” to raise interest rates
Market Sentiment: Long Indices, Long Commodities, Mixed on USD Ahead of FOMC Decision
– Indices: Attempting to get back into indices following the latest record highs and taking heavy long bias in the S&P even higher (to 71% from 69%), Dow (60% from 56% yesterday), and shifts in the Nasdaq (from slight sell 51% to the middle)
– Commodities: Pullback in price squeezes longs further and sees sentiment fall out of extreme buy in gold (to 75% from 78% yesterday) while remain in it for silver (84% from 85%) and WTI (83% from 80%), with a shift in natural gas (from the middle to majority long 58%) after yesterday’s pullback
– FX: Reach heavy buy territory in (70% from 62% yesterday) as price reaches a key support level, shifts from the middle in (to a majority short 60%) following the increase in its price, and not far off shifting in (slight sell 53%)
Data:
– US CB’s 94.6 above forecast; improves to -4 from -17; housing prices in August up 0.4% m/m (FHFA) and 1.6%y/y (S&P/CS)
– consumer confidence survey worsens to -24.1 from -22.3
– Australian CPI 3.5% y/y well above 3.1% forecast
Today: The Big Day Has Arrived
– US FOMC policy announcement (10 pm Dubai time with the press conference at 10:30 pm; 25bp rate cut expected), weekly mortgage applications (3 pm), pending home sales (6 pm), EIA’s weekly energy inventory estimates (6:30 pm)
o Earnings from Microsoft (NASDAQ:), Meta (NASDAQ:), Alphabet (NASDAQ:)
– Bank of Canada’s policy announcement (5:45 pm; 25bp rate cut expected)
– UK money and lending data (1:30pm)