US tech rally drives all time highs, earnings ahead; Crude pressured by geopols - Newsquawk Europe Market Open

• APAC stocks traded mixed as most major indices followed suit to the gains stateside where a tech rally led the S&P 500 and Dow to fresh all-time highs.
• Fed's Waller (Voter) said the Fed should proceed with more caution on rate cuts than was needed at the September meeting.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.3% after the cash market closed higher by 0.7% on Monday.
• DXY is firmer and just above the 103 mark, EUR/USD has traded on both sides of the 1.09 mark overnight, USD/JPY ran out of steam ahead of 150.
• Looking ahead, highlights include German Wholesale Price Index, UK Jobs, Swedish CPI, EZ/German ZEW Survey, Canadian CPI, NZ CPI, IEA OMR, SARB Policy Announcement, NY Fed SCE, Fed Discount Rate Minutes, Fed’s Daly & Kugler, RBA’s Hunter, RBNZ’s Silk, Supply from UK
• Earnings from UnitedHealth Group, Johnson & Johnson, PNC Financial Services, Bank of America, Walgreens Boots Alliance, Goldman Sachs, Charles Schwab, Citigroup, United Airlines, LVMH & Bellway.

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US TRADE

EQUITIES

• US stocks were underpinned from the open and both the S&P 500 and DJIA printed fresh record highs amid a tech rally which also saw Nvidia shares notch a record closing high, while nearly all sectors gained aside from energy due to recent declines in oil prices owing to China data and stimulus-related disappointment. Furthermore, the sell-off in oil was later exacerbated after it was reported that Israeli PM Netanyahu told the US that Israel will strike Iranian military, not nuclear or oil, targets.
• SPX +0.77% at 5,860, NDX +0.82% at 20,439, DJIA +0.47% at 40,065, RUT +0.64% at 2,249.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Waller (Voter) said the Fed should proceed with more caution on rate cuts than was needed at the September meeting and the baseline calls for reducing the policy rate gradually over the next year with the policy rate currently restrictive. Waller said if the economy proceeds as expected, they can move policy to a neutral stance at a deliberate pace and if in a less likely case, inflation falls below 2% or the labour market deteriorates, the Fed can front-load rate cuts, while he added that if inflation unexpectedly climbs, the Fed could pause rate cuts and noted the latest inflation data was disappointing.
• Fed's Kashkari (2026 Voter) said they have made a lot of progress on inflation and the labour market is strong, while he added it is not worth it to have the unemployment rate shoot up. Kashkari also stated that he doesn't think China is remotely competitive with the US and is not at all worried that the yuan could replace the dollar as the global reserve currency. Furthermore, he said the US competitive position is very strong but it can't be taken for granted, as well as commented that Bitcoin has been around a dozen years and it’s still useless.

APAC TRADE

EQUITIES

• APAC stocks traded mixed as most major indices followed suit to the gains stateside where a tech rally led the S&P 500 and Dow to fresh all-time highs, although Chinese markets lagged following weak trade data.
• ASX 200 climbed to a record high with advances led by the top-weighted financial sector and miners.
• Nikkei 225 outperformed and gapped back above the 40,000 level on return from the long weekend.
• Hang Seng and Shanghai Comp were pressured after weak trade data and stimulus disappointment, while trade frictions also lingered with the US mulling capping NVIDIA and AMD AI chip sales to some countries.
• US equity futures (ES +0.1%, NQ U/C) remained afloat after the record highs seen during Wall Street trade.
• European equity futures are indicative of a positive cash open with the Euro Stoxx 50 future +0.3% after the cash market closed higher by 0.7% on Monday.

FX

• DXY held onto the gains from Columbus Day which were attributed to the Trump effect on the dollar after recent polls suggested a tighter election as Trump narrowed the gap between him and Harris, while the upside was also capped as participants digested the latest Fed rhetoric.
• EUR/USD traded indecisively with price action kept within a tight range on both sides of the 1.0900 level.
• GBP/USD oscillated around the 1.3050 focal point ahead of the latest UK jobs and average earnings data.
• USD/JPY marginally softened in a mild pullback after hitting resistance just shy of the 150.00 handle.
• Antipodeans ultimately softened amid a weaker yuan and the downbeat mood in China.
• PBoC set USD/CNY mid-point at 7.0830 vs exp. 7.0840 (prev. 7.0723).

FIXED INCOME

• 10yr UST futures mildly extended on the prior day's intraday rebound which was helped by comments from Fed's Waller who outlined several potential scenarios and noted if the economy proceeds as expected, the Fed can move policy to a neutral stance at a "deliberate pace".
• Bund futures remained underpinned after having recently bounced off support at the 133.00 level, while the attention now turns to upcoming data releases including German WPI and ZEW survey.
• 10yr JGB futures mildly weakened on reopening from the long weekend with prices also not helped by a lack of fresh drivers and softer demand at the enhanced liquidity auction for long-end JGBs.

COMMODITIES

• Crude futures fell after recent China-related disappointment with the sell-off exacerbated after a report that Israeli PM Netanyahu told the US that Israel will strike the Iranian military and not nuclear or oil targets.
• Spot gold traded indecisively after the prior day's fluctuations and amid an uneventful dollar.
• Copper futures were subdued amid the downbeat mood in China owing to recent disappointing data.

CRYPTO

• Bitcoin was pressured and retreated beneath the USD 66,000 level.

NOTABLE ASIA-PAC HEADLINES

• Chinese banks mull cutting rates on CNY 300tln of deposits as early as this week with the major banks to be guided by the PBoC's interest rate self-disciplinary mechanism to lower rates on a number of deposit products, according to Bloomberg.
• China began enforcing an up to 20% tax on overseas investment gains by the country’s ultra-rich.
• US weighs capping NVIDIA (NVDA) and AMD (AMD) AI chip sales to some countries, according to Bloomberg.

GEOPOLITICS

MIDDLE EAST

• Israeli PM Netanyahu told the US that Israel will strike Iranian military, not nuclear or oil, targets, according to officials cited by The Washington Post.
• Israeli PM Netanyahu held a secret meeting with Defence Minister Gallant and Chief of Stall Halevi to discuss a possible attack on Iran, according to Al Jazeera citing Israeli press.
• Senior Israeli security official said the response to the Iranian attack will be strong and Israel must be prepared for the Iranian reaction, while they "must prepare for the exchange of blows, which may drag Washington into war, which it does not want".
• Israel Broadcasting Corporation cited Israeli PM Netanyahu's office stating that they listen to the views of the US administration, but will make decisions based on Israel's interests, according to Al Jazeera.
• Israeli PM Netanyahu said they will continue to strike Hezbollah mercilessly throughout Lebanon, including in Beirut.
• Israeli Defence Minister Gallant told US officials that Israel will not impose a "starvation plan" in Gaza, according to Axios's Ravid.
• UN Security Council expressed strong concern after several UN peacekeeping positions in Lebanon came under fire, while it urged all parties to respect the safety and security of UNIFIL peacekeepers and premises, as well as expressed deep concern for civilian casualties and the destruction of civilian infrastructure.
• There will be an international conference on Lebanon in France where over 20 countries agree to participate and they will discuss increasing pressure on Israel to avoid expanding its war on Lebanon, according to Sky News Arabia.
• US President Biden asked the National Security Council to inform Iran that any attempt on former President Trump's life would be considered an act of war, according to Fox News. The White House later said it has been closely tracking Iranian threats against Trump and former Trump administration officials for years, while it warned Iran will face severe consequences if it attacks any US citizen.

OTHER

• NATO Secretary General Rutte in his first visit to Ukraine mission, welcomed plans for temporary deployment of US long-range missiles to Germany from 2026, while he said NATO will not be cowed by Russian threats and will keep its strong support of Kyiv.
• North Korea blew up part of inter-Korean roads, according to South Korea's military. It was separately reported that South Korea's military fired warning shots south of the demarcation line after North Korea destroyed inter-Korean roads.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Reeves announced over GBP 60bln of investments into the UK yesterday and said they will stick to manifesto commitments not to raise taxes on working people when asked about national insurance paid by companies.