📊 Market Report.
🇨🇳 New mesures from China. The People’s Bank of China cut banks’ reserve requirement ratio by 0.5 percentage points, releasing around 1 trillion yuan in long-term liquidity as announced earlier. It also trimmed the seven-day reverse repo rate to 1.5% from 1.7%, confirming the timing of the second easing move, rate cuts and RRR reductions to injecting liquidity and supporting the economy.
🇩🇪 The number of unemployed people in Germany rose more than expected in September to 2.82 million, an increase of 17,000. There were 696,000 job openings in September, 65,000 fewer than a year ago. Germany’s economy contracted by 0.1% in Q2 and may shrink again in Q3, meeting the definition of a recession. The structural problems of the German economy are starting to impact the resilient labor market. Unemployment is forecast to edge higher to 6.0% this year from 5.7% in 2023, not seen to fall to that level again until 2026.
🚗 France has voiced support for proposed European Union tariffs on electric vehicles imported from China as part of an investigation into whether China is selling EVs in Europe at unfairly low prices. French Finance Minister Bruno Le Maire said China represents a “systemic rival” to the EU’s economy and that Brussels needs to “defend European industrial interests. The EU launched an anti-dumping investigation in September into whether Chinese EV manufacturers benefit from unfair subsidies. China is a major EV exporter to Europe, with brands like BYD and SGMW selling vehicles into the region. Imports have risen as the EU seeks to electrify transport. European carmakers like Renault and Stellantis back tariffs, claiming Chinese firms undermine local jobs with below-cost pricing backed by Beijing support. However, tariffs risk retaliation from China and could increase vehicle costs in Europe, going against climate goals of affordable EVs. Tariffs could be imposed as early as next year. Remember that, Germany, Europe’s exporter, opposed tariffs on China.
🏆 Saudi Arabia may be secretly accumulating gold, with an estimated 160 tonnes purchased in Switzerland since 2022 according to analyst estimates. This contrasts with their historical role in establishing the petrodollar system through oil trade exclusively in US dollars since 1975. Official reserves are unchanged but undeclared purchases have surged, likely driven by China and Saudi Arabia aiming to diversify from dollars. This aligns with the BRICS agenda of preparing for a potential return to a gold-backed standard challenging US dollar dominance. Gold purchases provide strategic diversification but vulnerabilities in war underscore Bitcoin’s advantages of instant transfer without geographical constraints.
📈 Market View:
📈 China’s latest moves continue to push Asian stock markets higher. The Hang Seng Index (HSI) has made a move almost identical to the one it made in May with the previous stimulus package, accumulating a rise of more than 22% since last week. Mini S&P 500 futures have continued to climb, reaching 5,830 hours ago and then retreating to 5,800 at this point. The Nasdaq 100, which was as high as 20,300 points, has also retreated to 20,175 points. The Russell 2000, surprisingly, continues to retreat from last week and is at 2,210 points.
💵 The dollar index is holding above 100.50 points, but has also weakened. The euro/dollar is still trapped in the range of 1.12 and 1.11, currently trading at 1.1158.
🇩🇪 The DAX 40, despite the poor German employment data, which points to a disastrous economic situation, is advancing to new all-time highs and is currently trading at over 19,450 points. The Spanish IBEX 35 index is close to breaking the 12,000 point barrier; since the 2008 crisis, the index has not managed to trade above 12,000 except in 2010, when it surpassed it for a couple of weeks before plummeting again.
🏅 New records in gold, which hit $2,700 an ounce a few hours ago, although it has fallen back a little since then. Crude oil continues to fall and is at $71 per barrel Brent. Bitcoin broke above $65,000, touched $66,000 and is now back down to $65,500.
🌍 Geopolitics:
🇺🇸 The Republican Speaker of the House Mike Johnson demanded Ukrainian President Zelenskyy “immediately fire” his ambassador to the US. Some Republicans were angered by Zelenskyy’s visit to an ammunition plant in the swing state of Pennsylvania with Democratic politicians. The House Oversight Committee will investigate if the trip was an attempt to benefit the presidential campaign of Kamala Harris. Former President Trump has criticized Zelenskyy and blamed Biden/Harris for Russia’s invasion of Ukraine. Some republicans say this action amounted to foreign election interference.
🤝 Trump insists he could make a deal between Putin and Zelenskyy “quite quickly,” which Ukraine rejects and critics call proposals of surrender. Former US President Donald Trump will meet President Zelenskyy today. Earlier, Trump had been critical of supporting Ukraine, while his candidate Vance said Russia could keep land and Ukraine forget NATO.
