The highlight on Monday was the preliminary global PMI data for September from the S&P, with poor data in europe and mixed feelings in the USA. The manufacturing data in the USA was poor, while the service sector exceeded expectations, leading to a two-way fluctuation in US bond yields, ultimately ending up nearly flat.

The preliminary September Markit Manufacturing PMI in the USA dropped to 47, hitting a 15-month low, with both new orders and employment indices at multi-year lows and shrinking for three consecutive months. The Services PMI dropped to 55.4, a two-month low but expanding for 22 consecutive months. Business activity in the USA remained stable in September, but average prices of goods and services rose at the fastest pace in six months, possibly indicating accelerated inflation in the coming months.

France's September composite PMI preliminary figure of 47.4 hit an eight-month low and remained in the contraction zone, while Germany saw a contraction in business activity in September, with the composite PMI dropping from 48.4 in August to 47.2 in September, hitting a seven-month low. The UK's composite PMI index slowed slightly to 52.9, expanding for the 11th consecutive month, hinting at a soft landing for the UK economy, supporting a two-and-a-half-year high for the British Pound.

The Federal Reserve made a significant 50 basis point rate cut last week, and the remarks of Federal Reserve officials have since become the focus of the market.

This year's FOMC member and Atlanta Fed President Bostic predicted a faster rate cut than expected, but the Fed did not 'crazily' pursue the neutral interest rate. Next year's FOMC member and Chicago Fed President Evans support aggressive rate cuts. However, the FOMC member and Minneapolis Fed President Kashkari, a hawkish member, predicted a slower pace of rate cuts in the future, expecting a further 50 basis point cut this year.

The current market expects a 54% chance of a 25 basis point rate cut at the November meeting, with a 46% chance of a 50 basis point cut. The total rate cut for the year is expected to be around 78 basis points, with a more likely aggressive cut in December.

The US stock market saw a slight increase on Monday, with the Dow and S&P narrowly closing at new highs, but small-cap stock indices fell by 0.34%, leading the decline. Healthcare, communication, and technology sectors saw a slight decrease, while the financial sector remained stable.

• The three major US indices edged up slightly: the S&P 500 index rose 16.02 points, or 0.28%, to 5718.57. The Dow, closely related to the economic cycle, rose 61.29 points, or 0.15%, to 42124.65. The Nasdaq, dominated by technology stocks, rose 25.95 points, or 0.14%, to 17974.27. The Nasdaq 100 rose 0.31%, with the Nasdaq Technology Market Cap Weighted Index (NDXTMC) which measures the performance of the Nasdaq 100 technology sector almost flat. The Russell 2000 index, more sensitive to the economic cycle, fell by 0.34%. The VIX fear index fell by 1.61% to 15.89.

Small cap stocks lead the decline, with the Dow and S&P 500 both hitting new closing highs.

• US industry ETFs closed mixed. Energy ETFs and consumer discretionary ETFs rose by more than 1% each, while utilities ETFs also rose by close to 1%, and daily consumer goods ETFs and semiconductor ETFs rose by about 0.5% each. However, the biotechnology index ETF fell by over 1.5%, regional banks ETF fell by nearly 1%, and banks ETF fell by over 0.3%.

• Most of the 11 sectors of the S&P 500 index closed higher. The energy sector rose by 1.31%, the consumer discretionary sector by 1.3%, real estate by 1.13%, and the financial sector by 0.1%, the smallest gain. Among the three sectors that closed lower, the information technology/technology sector fell by 0.08%, the telecommunications sector by 0.15%, and the healthcare sector by 0.25%.

• Wall Street's major banks' views: HSBC strategists say that the recent stock market rally driven by the Federal Reserve may continue further, with cyclical stocks, including energy stocks, set to rise. Due to the Fed's apparent confidence in the inflation outlook, it is expected that the interest rates will be cut at each of the next six meetings.

• "Big Tech" stocks show mixed performance. Tesla rose by 4.93% to hit a two-month high, with Barclays expecting vehicle deliveries to exceed expectations in the third quarter. Amazon rose by 1.19%, Meta rose by 0.55% to set new highs for several days, Nvidia initially fell by 1% but closed with a 0.22% increase, while Google A fell by 1.06%. Apple fell by 0.76%, with reports suggesting that the A16 chip from Apple has started production in the U.S. for the first time, with production targets expected to be met in the first half of next year. Microsoft fell by 0.4%.

• Most chip stocks rose. The Philadelphia Semiconductor Index turned higher by 0.51% in the afternoon. The SOXX industry ETF rose by 0.39%; Nvidia's double long ETF rose by 0.26%. Intel rose by 3.3%, with reports suggesting that private equity firm Apollo proposed an investment of up to $5 billion in Intel. Micron Technology rose by 2.94%. Broadcom rose by 1.08%, ON Semiconductor by 0.24%, KLA Corp by 0.32%, ASML Holding ADR by 1.03%, AMD by 0.51%, Taiwan Semiconductor's U.S. shares rose by 0.39%, Arm Holdings rose by 2.03%, while Qualcomm fell by 1.75%, and Marvell Technology fell by 2.79%.

• AI concept stocks showed mixed trends. CrowdStrike fell by 2.24%, Oracle fell by 1.22%, BigBear.ai fell by 1.27%. SoundHound AI, an AI voice company held by Nvidia, fell by 1.81%, while BullFrog AI rose by 32.37%, Palantir rose by 2.02%, Super Micro Computer rose by 1.9%, Serve Robotics rose by 6.28%, Snowflake rose by 2.71%, Dell Technologies rose by 0.06%, C3.ai rose by 0.22%.

• Chinese concept stocks outperformed the US large-cap market. The Nasdaq Golden Dragon China Index closed up 1.36%. In the ETF sector, the China Technology ETF (CQQQ) rose by 1.15%. The Chinese Internet Sector ETF (KWEB) rose by 1.76%.

• JD.com rose by 4.24%, Li Auto Inc. rose by 3.06%, Baidu rose by 2.37%, PDD Holdings rose by 2.4%, Alibaba rose by 2.04%, NetEase rose by 2.02%, Jike increased by 1.67%, Vipshop climbed by 1.45%, Mengniu Dairy ADR rose by 1.41%, Tencent ADR rose by 1.33%, Xpeng rebounded by 0.76% after falling 4%, denying rumors of acquiring Audi Brussels factory. Meanwhile, New Oriental fell by 3.98%, Xpeng dropped by 0.42%, Miniso fell by 16.65%, and the controlling company acquired the controlling rights of Yonghui Superstores for nearly 6.3 billion yuan.

• Other key stocks: (1) Boeing's stock price rose by 1.96%. The company increased its bid to the machinists union in response to labor disputes. (2) Deere & Co. briefly fell by 2.2% after hours. Former U.S. President Trump claimed that if Deere & Co. dared to move its operations to Mexico, tariffs would be imposed. (3) Novo Nordisk fell by 2.99% as the company faced inquiries from the U.S. Senate over weight loss drug pricing issues. (4) Astrazeneca dropped by 1.58% as its breast cancer treatment trial did not meet expectations.

Disappointing PMI data from France and Germany increased expectations of a rate cut by the European Central Bank, leading to a rise in European stock markets. The automotive sector led the gains, rising by over 1.9%. Among the components, Deutsche Bank fell by 6%, with only the Italian stock index declining in the national index.

The pan-European Stoxx 600 index initially fell earlier in the session, but eventually rose by 0.40% to 516.32 points. Banca Ifis in Italy seeks to increase its stake in Deutsche Bank to 29%, which is opposed by the German government but supported by Italy.

Germany's stock index rose by 0.68%. France's stock index rose by 0.10%. Italy's stock index fell by 0.24%. Spain's stock index rose by 0.38%. The UK stock index rose by 0.36%. The Netherlands stock index rose by 0.66%.

US bond yields rose and then fell, with the two-year German bond yield dropping by over 8 basis points, ending the inversion status of the 2/10-year German bond yield curve since early November 2022:

• US Bonds: At the close, the more interest rate-sensitive two-year US bond yield fell by 1.05 basis points to 3.5803%, trading between the range of 3.6224%-3.5592% during the session. The US 10-year benchmark Treasury yield remained roughly flat, at 3.7413%, fluctuating between 3.7925%-3.73% during the session, reaching a daily high of 3.7925% at 21:45 Beijing time after the release of US PMI data and hitting a new high at 22:07.

• Eurozone benchmark 10-year German bund yield fell by 5.1 basis points. The 2-year German bund yield dropped by 8.1 basis points, hitting a daily low after the release of Eurozone PMI data. The 10-year French government bond yield decreased by 2.7 basis points, while the 10-year Italian government bond yield fell by 4.7 basis points. The UK's 10-year government bond yield rose by 2.0 basis points, and the 2-year UK bond yield fell by 0.9 basis points.

Although facing selling pressure during the EU trading session and buying pressure during the US trading session, the US treasury yield remained relatively unchanged at the close.

The US Dollar Index (DXY) rose on Monday before falling back, gaining 0.2% and briefly breaking above 101. The Japanese yen remained below 143 during the session but moved away from a two-week low. Offshore Chinese yuan dropped the most by 230 points, briefly falling below 7.06.

• USD: The DXY, which measures against a basket of six major currencies, rose by 0.20% to 100.927 points. With the release of PMI data for France, Germany, and the Eurozone starting at 15:15 Beijing time, the US Dollar significantly rose to a daily high of 101.229 points at 16:14.

• The Bloomberg Dollar Index remained relatively flat at 1224.03 points, reaching a daily high of 1227.98 points at 16:14 and then hitting a daily low of 1222.82 points at 23:47 after the release of US PMI data at 21:45.

After soaring due to the impact of EU PMI data (softening Euro), the US Dollar closed flat on the same day before subsequently falling back within the recent range.

• Non-dollar currencies: Euro fell 0.43% against the Dollar, Pound rose 0.19% against the Dollar, Dollar fell 0.30% against the Swiss Franc. Among commodity currencies, Aussie Dollar rose 0.50% against USD, New Zealand Dollar rose 0.46% against USD, and USD fell 0.24% against the Canadian Dollar.

• On the news front, after the Fed's bold 50 basis point rate cut, Goldman Sachs revised down its expectations for the US Dollar, reaching record high expectations for the Pound since 2021.

• Yen: The yen rose 0.19% against the dollar to 143.58 yen, with an intraday trading range of 144.46-143.17 yen.

• Offshore Renminbi (CNH) pullback: The offshore Renminbi fell by 183 points to 7.0604 yuan in the late trading session, with overall trading in the range of 7.0400-7.0650 yuan during the session.

• Cryptocurrencies are rising. The largest market capitalization leader Bitcoin rose by 0.77% at the close to $63,420.00. The second largest, Ethereum, rose by 4.38% to a one-month high of $2,671.00 at the close.

Bitcoin surged overnight (breaking through $64,500), then retreated.

Soft European business activities exacerbate concerns over oil demand, overshadowing the impact of the Middle East situation. U.S. oil fell 2% intraday and closed nearly 0.9% lower:

• US oil: WTI November crude oil futures fell by $0.63, down over 0.89%, to $70.37 per barrel. US oil continued its earlier uptrend, with US stocks rising over 1.1% in early trading to nearly $72, then accelerating downwards. Midday US stocks fell by over 2.1%, dropping below $69.50.

• Brent November crude oil futures closed down $0.59, a decrease of 0.79%, at $73.90 per barrel. Brent oil continued its earlier uptrend, with US stocks rising by over 0.9% to break above the $75 level in early trading, then accelerating downward trend, hitting a low of nearly 1.9% by midday, nearing the $73 level.

• On the news front, according to CCTV News, the Israeli military claimed to have carried out a 'precise' airstrike on the Lebanese capital Beirut. Lebanon has experienced the heaviest casualties since the 2006 Lebanon-Israel War, with Israeli airstrikes hitting several areas in Lebanon, resulting in 356 fatalities and 1,246 injuries.

• Natural gas: US October natural gas futures closed up over 7.35% at $2.6130 per million British thermal units.

US crude oil fell nearly 0.9%.

Due to expectations of a Fed rate cut and escalating tensions in the Middle East, spot gold rose over 0.2% on Monday, hitting a historical high above $2630 during trading.

• Gold: COMEX December gold futures rose by 0.27% to $2653.40 per ounce at the close, refreshing an intraday historical high of $2659.80 at 22:29 Beijing time. In early European trading, spot gold fell by over 0.3% to near $2610, then continued to rise. Following the release of US PMI data at 21:45, in early US trading at 22:27, gold rose by nearly 0.5% to surpass $2630 once again, setting a new historical high. At the close, spot gold rose by 0.26% to $2628.72 per ounce.

• Silver: COMEX December silver futures fell 1.57% in the final trading session, closing at $31.010 per ounce. Overall, spot silver maintained a downward trend. After the release of Eurozone PMI data, European stocks fell to a low of more than 2.6% at 16:45, pushing below $30.30. At the close, spot silver fell 1.55% to $30.6943 per ounce.

• Most industrial base metals in London rose. Dr. Copper, an economic indicator, rose by nearly 0.76% to $9548 per ton. LME zinc closed up $11. LME aluminum closed up $10. LME nickel closed up $34. LME tin rose over 0.52%. LME lead closed up $2.

• COMEX copper futures rose 0.06%, trading at $4.3457 per pound.

Gold rose slightly, hitting another historical high.

Editor/Rocky