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Daily Macro markets update 14/10/2024

Market Report.

📈 Last week’s US inflation data were not very optimistic. Core inflation rebounded to 3.3% versus 3.2% expected and CPI rose to 2.4% versus 2.3% expected. Also, jobless claims came in higher than expected at 258K versus 231K expected. Inflation will continue to rise as the labour market weakens.

🚗 On Friday, after the company’s event let investors down, Tesla’s stock fell 8.8%. Elon Musk, the CEO, introduced the Robovan, a large autonomous vehicle, and the Cybercab, a two-seater without pedals or steering wheels, at the event on Thursday night. However, Musk provided few further specifics, which led to analysts questioning the company.

💰 The US financial sector, however, closed a very good week with strong gains after results, exceeding 5% JM and 7% WFC. The largest bank in the United States, JPMorgan Chase, announced better-than-expected third-quarter sales and profitability. Revenue increased 6% with the support of a 3% rise in net interest income from the previous year. The third quarter was good for Wells Fargo. Although the bank’s profitability above forecasts, sales fell short of projections and NII declined, in contrast to JPMorgan.

🇨🇳 The Shanghai Composite of China increased by about 2%. Deflation risks in China are still present. The PPI index has shown -2.8% against -2.5% expected, and is well below the previous period of -1.8%. The producer price index is the prelude to inflation, therefore, there is a deflationary risk. This indicates that China’s government could launch more stimulus to the economy without the risk of triggering inflation. The published CPI rate was 0.4% against the expected 0.6%, which is in line with our hypothesis.

📦 China’s exports grew 2.4% in September from a year ago in dollar terms, below forecasts, while imports rose 0.3%, also below estimates. Exports had been a bright spot but are showing signs of weakness along with domestic demand. Third-quarter GDP and other data are due out Friday from the National Bureau of Statistics.

🏢 Chinese Finance Minister Lan Fo’an told reporters that although Beijing has “rather large” leeway to raise its budget deficit, the administration is still debating stimulus programs. Lan also outlined policies to boost the real estate sector and jobs.

Market View:

📈 Despite last week’s spike in inflation in the US, US stock markets have reacted optimistically. The financial sector’s good results are pulling the market up. The S&P 500 broke through the 5800 point barrier and is currently trading at 5867 points. The Nasdaq 100 also managed to break through the 20,000 point mark and is currently trading at 20,345 points. The 2-year US bond is approaching a 4.10% yield in the wake of Thursday’s inflation data, which could mean slower than expected rate cuts, but has since retreated to 3.95%.

💵 The dollar index continues to advance, and has broken above 103 points, possibly heading for a target at 103.50. As a result, the EUR/USD ended up losing 1.0950 and is currently trading at 1.0930.

📈 In Europe, stock markets also remain bullish. The DAX 40 is very close to its all-time highs at around 19500 points, currently trading at 19430 points. The EuroStoxx 50 has managed to reach 5000 points and is timidly trying to hold on to it, currently trading at 5005 points.

🛢️ Crude oil remains high despite having fallen from 81 dollars per barrel Brent to 77 dollars at the moment. Gold recovered sharply from previous price levels, rising above 2650 dollars per ounce and currently trading at 2675 dollars. Bitcoin has recovered strongly over the weekend and is on the verge of the $65,000 mark, currently trading at $64,870.

Geopolitics:

🚔 A man was arrested at a checkpoint outside a rally for former US president Donald Trump in Coachella, California after law enforcement officers discovered he was carrying loaded weapons and fake press passes. According to the local sheriff, the 49-year-old suspect from Las Vegas presented fraudulent VIP and media credentials that raised alarms among deputies. A search found the man illegally possessed a shotgun, handgun and high-capacity magazine, leading to his arrest on firearms charges. The sheriff stated the interception likely prevented another assassination attempt on Trump, who has survived two other attempts in recent months

🕊️ At least 15 UN peacekeepers have been injured in southern Lebanon as Israel intensifies attacks, with some bases struck “repeatedly” and “deliberately”. Attacks on UN peacekeepers constitute a “grave violation” drawing widespread condemnation including from the EU. Sixteen EU states contribute to UNIFIL under discussion by foreign ministers on Monday given the dangers for European troops. Italy has summoned Israel over attacks as its bases were hit, saying this was not accidental. The escalation is expected to be addressed at the EU leaders’ summit this week. EU support for the Lebanese army and UNIFIL’s stabilizing role is reaffirmed. Following the assault on UN soldiers, international law expert Fabio Marcelli argues that the time is right for a vote by the UN General Assembly to exclude Israel from the latter.

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