Global Market Quick Take: Asia – October 30, 2024

Key points: 

• Macro: Softer JOLTS job openings, UK budget on tap 
• Equities: Alphabet gained 6% post market after reporting strong cloud revenue growth 
• FX: AUD under pressures from Trump trade, GBP outperforms with budget ahead 
• Commodities: Gold reached another record high as uncertainties increased 
• Fixed income: Treasuries are heading for their worst month in over two years 

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Disclaimer: Past performance does not indicate future performance. 

Macro: 

• The US JOLTS headline Job Openings fell to 7.443mln from the prior revised down 7.861mln, well beneath the consensus of 8.0mln. This saw the vacancy rate fall to 4.5% from 4.7%, while the quits rate fell to 1.9% from 2.0%. Weather may be to blame here so market reaction was limited and focus shifts to non-farm payrolls on Friday. 
• US consumer confidence came in strong as it printed, 108.7, well above the expected, 99.5, and the prior, 99.2, and also above the upper end of the forecast range. Within the report, the Present Situation index rose by 14.2 points to 138.0, while the Expectations Index increased by 6.3 points to 89.1. 
• Reports suggested that Chinese officials will announce 10 trillion yuan ($1.4 trillion) package in fiscal stimulus in the coming week as officials meet Nov 4-8. The details of the package were however weaker. Firstly, the spending will be spread over three years 2024, 2025 and 2026. Secondly, 6 trillion yuan of that, or 60%, is earmarked for helping local governments with their debt. That raises more questions than it answers and points to deeper problems at the local level than understood. The next 4 trillion yuan will be used for property purchases over five years as part of the government's plan to buy up unused properties for low-income housing. This would still mean a limited immediate consumption boost.  
• Macro data due today: UK Budget, US ADP (Oct), German Flash GDP (Q3) and Prelim CPI (Oct), EZ Prelim GDP (Oct), US GDP Advance (Q3) 

Equities:  

• US – Nasdaq Composite closed at record highs after gaining 0.78% as traders remain optimistic ahead of tech earnings this week and US elections on 5th November. For an ETF playbook on elections, read this article.  
• Alphabet reported strong earnings, with cloud revenue surging nearly 35% to $11.35 billion. The CFO announced plans to enhance cost-cutting using AI for workflow and headcount management. Shares rose up to 6% in after-hours trading. Meta and Microsoft report earnings after market today, and a preview for all the 5 of the Mag 7 reporting earnings this week can be found here.  
• AMD's third-quarter earnings met forecasts, with revenue slightly exceeding expectations. Despite doubling data center sales, fourth-quarter guidance aligned with consensus, leading to a 7% drop in shares during extended trading as the forecast failed to impress. 
• Japan - Nikkei 225 rose 0.77%. The ruling party lost its majority, affecting BOJ rate plans. Japan's unemployment fell to 2.4%. The BOJ will decide on monetary policy on Thursday.   
• Hong Kong – HSI rose 0.5% as investors awaited Chinese stimulus details. HSBC Hong Kong surged 2.9% on strong Q3 profits and a $3 billion buyback plan. Gains were tempered by caution over China's PMI and a 27.1% drop in industrial profits.  
• Europe - European markets closed lower on Tuesday, with the Stoxx 50 down 0.4% and Stoxx 600 down 0.6%. Novartis fell 2.6% despite raising guidance. BP dropped 5%, Banco Santander 2.8%, and Lufthansa 5% due to weak earnings. Conversely, HSBC rose 3.7% on strong earnings and a $3 billion buyback, while Adidas gained 3.3% with a 71% profit surge. 
• Earnings – Eli Lilly, Microsoft, Meta, Coinbase, Robinhood, Etsy, Riot, Roku, Starbucks, BYD 

FX: 

• USD was firm as Trump trade dynamics interacted with weaker JOLTS job openings flagging some concerns on the health of the US market despite being primarily weather-driven. 
• AUDUSD was under significant pressure as it trades below its 200DMA, and printed near 3-month lows at 0.6545 despite reports of fiscal stimulus in China. Weakness in commodity currencies is clearly a sign that markets continue to question the efficacy of Chinese measures and is getting increasingly wary about the tariff threat from a Republican sweep in the US elections next week. 
• USDJPY reprinted highs from Monday at 153.88 but eased later as USD softened. 
• GBPUSD was a clear outperformer, and is seen extending gains this morning in Asia to 1.3016 with the widely-anticipated UK budget which is expected to be net expansionary, however, lead to increased taxation at an individual level. For an in-depth discussion on the UK budget and what it means for investors, read this article. 

Commodities: 

• Gold rose by over 1%, reaching a new record closing high, as uncertainties about the U.S. presidential election and Middle East conflict, along with anticipated Federal Reserve interest rate cuts, enhanced its appeal. 
• Silver increased by over 2% to $34.45, following gold's rise, as US election uncertainties and Middle East tensions boosted demand for safe-haven assets. 
• WTI crude futures remained near $67.3 after a 6% drop in the previous session, reaching four-week lows. US crude inventories fell by 0.573 million barrels last week, surprising expectations of a 2.3 million barrel rise, marking the eighth draw in twelve weeks. 

Fixed income: 

• Treasuries are heading for their worst month in over two years. The selloff before the $44 billion 7-year note auction paused when it yielded lower than expected, showing strong demand. The 10-year yield was around 4.25%, having exceeded 4.33% for the first time since July. 
• Bunds and Gilts fell, led by the middle of the curve, as traders anticipated increased US and UK fiscal spending and prepared for the UK budget.

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