Source: Wall Street See

Federal Reserve officials' speeches have cooled expectations for rate cuts. Chicago Fed President Evans said on Monday that the Fed will take more gradual rate-cutting measures in the future. Kansas City Fed President George Schultze, a hawk on the FOMC, said in the face of uncertainty, he hopes to slow down the pace of rate cuts. Minneapolis Fed President Kashkari, also a hawk on the FOMC, expects the pace of rate cuts to slow in the coming quarters, but rapid deterioration in the labor market may prompt him to call for faster rate cuts.

Following the European Central Bank's third rate cut this year, ECB board member Kazimir believes the likelihood of Eurozone inflation returning to target next year is increasing, but the ECB still needs more evidence to declare victory. ECB board member Simkus pointed out that if the downward trend in inflation continues, further rate cuts will be considered. In addition, data released on Monday showed that Germany's September Producer Price Index (PPI) fell more than expected, down 1.4% year-on-year, mainly due to a decline in energy costs.

Goldman Sachs, JPMorgan, Deutsche Bank and others collectively voiced strong support for the 'Trump Trade', with US bond yields and the dollar rising together on Wall Street. However, a non-partisan budget watchdog estimated that Trump's policies could deplete Social Security funds by 2031, three years earlier than expected, and could lead to a 33% reduction in Social Security benefits by 2035, higher than the projected 23% cut under current law after a decade.

On Monday, October 21, only the Nasdaq and chip indices of US stocks rose, small-cap stocks led the decline, the S&P Dow Jones retreated from the new high, the Dow Jones ended three days of consecutive gains and fell by nearly 400 points. Nvidia rose over 4.1% to hit a historical high, closing in on a market cap exceeding $3.5 trillion approaching Apple, the technology sector was the only sector to rise, while real estate and healthcare sectors performed poorly, the decline of Chinese concept stocks narrowed, Pinduoduo, Bilibili, and Li Auto turned up, Xpeng Motors rose over 3%.

• The three major US indexes saw only a slight increase in the Nasdaq. The S&P 500 Index fell 10.69 points, or 0.18%, to 5853.98 points. The Dow Jones, closely related to economic cycles, fell 344.31 points, or 0.80%, to 42931.60 points. The Nasdaq, which is dominated by technology stocks, rose 50.45 points, or 0.27%, to 18540.01 points. The Nasdaq 100 Index rose by 0.18%. The Nasdaq Technology Market Capitalization Weighted Index (NDXTMC), which measures the performance of Nasdaq 100 technology stocks, rose by 0.65%. The Russell 2000 Small Cap Index, which is more sensitive to economic cycles, fell by 1.60%. The VIX fear index rose by 1.89% to 18.37 points.

• Most US industry ETFs closed lower. Semiconductor ETFs, technology industry ETFs, and global technology stock ETFs rose by about 0.5% each. However, regional bank ETFs and bank ETFs both fell by nearly 3%, biotech index ETFs and medical ETFs both fell by over 1%, daily consumer goods ETFs, financial ETFs, and optional consumer ETFs all fell by nearly 1%.

• Almost all 11 sectors of the S&P 500 Index experienced declines. The S&P 500 real estate index fell by 2.08%, the healthcare sector fell by 1.19%, the financial sector fell by 0.88%, the consumer discretionary sector fell by 0.64%, the energy sector fell by 0.21%, the telecom sector fell by 0.07%, while the information technology/technology sector rose by 0.93%.

• In terms of research strategies, Goldman Sachs strategists believe that the annualized return rate of the S&P 500 Index in the next ten years will fall to slightly above 3%, much lower than the past decade's 13%. However, Wells Fargo raised the target range for the S&P 500 Index by the end of 2025 to 6200-6400 points.

• The 'Tech Seven Sisters' saw more gains than losses. Nvidia rose 4.14% to $143.71, reaching a record high market cap of $3.53 trillion, surpassing the milestone previously only achieved by Apple with a market cap exceeding $3.5 trillion. Investors are looking forward to a boost from the November financial report. Apple rose 0.63%, also reaching a new closing high of $236.48. However, reports suggest that Apple's AI technology is considered to be more than two years behind industry leaders by internal staff. While early features from Apple Intelligence are practical, they aren't as impressive, especially compared to products from Google, OpenAI, and Meta. In addition, research shows that ChatGPT has a 25% higher accuracy rate than Apple's Siri and can answer 30% more questions. Google rose 0.4%, Honeywell reached an agreement with Google to introduce the Gemini generative AI into the industrial sector. Microsoft rose 0.15%, Microsoft launched an AI agent, deepening its competition with Salesforce. Amazon rose 0.04%, 'metaverse' company Meta fell 0.23%, and Tesla fell 0.84%.

• Chip stocks had mixed performance. After falling by 1.2%, the Philadelphia Semiconductor Index turned to a 0.13% increase to 5215.21 points, while the industry ETF SOXX fell by 0.19%. The NVIDIA 2x Long ETF rose by 8.25%. AMD rose by 1.24%, TSMC ADR rose by 0.58%, Intel rose by 0.31%, Broadcom rose by 0.06%, Arm Holdings fell by 0.44%, Micron Technology fell by 1.86%, Applied Materials fell by 1.02%, ASML ADR fell by 1.27%, KLA fell by 0.72%, Qualcomm fell by 1.12%. Qualcomm released a new Snapdragon series processor, which includes the self-developed Oryon processor design aimed at improving smartphone performance to laptop levels and supporting new AI tools. This new chip is claimed to be 45% faster and more energy efficient than the previous generation.

• The AI concept stocks showed mixed performance. BullFrog AI fell by 2.04%, SoundHound AI, a AI speech company held by Nvidia, fell by 2%, BigBear.ai dropped by 1.14%, C3.ai decreased by 0.47%, Oracle declined by 0.53%, Palantir dropped by 0.63%, CrowdStrike fell by 0.19%, Dell Technologies fell by 0.63%, while Snowflake rose by 0.02% and Super Micro Computer increased by 1.14%. Serve Robotics surged by 8.65%.

• Chinese concept stocks experienced more declines than gains. The Nasdaq Golden Dragon China Index initially dropped by 1.5% and closed down by 0.80%. In ETFs, the Invesco China Technology ETF (CQQQ) fell by 0.92%, KraneShares CSI China Internet ETF (KWEB) declined by 1.11%, Direxion Daily China Bull 3X Shares ETF (YINN) fell by 4.04%, Direxion Daily **** 3X Shares ETF (YANG) increased by 4.34%. The RONDHL China ETF (DRAG) dropped by 1.29%. FTSE A50 futures night session closed down by 0.27% at 13474.000 points.

• Among popular Chinese concept stocks, Baidu declined by 2.93%, New Oriental dropped by 2.52%, Vipshop fell by 1.96%, Tencent ADR declined by 1.64%, Mengniu Dairy ADR decreased by 1.8%, NIO Inc. dropped by 1.53%, Alibaba declined by 1.48%, Zeekr fell by 1.39%, NetEase decreased by 1.37%, Trip.com fell by 1.22%, JD.com dropped by 0.75%, Loop Capital upgraded JD.com ADR from Hold to Buy with a target price of $48. Li Auto rose by 0.04%, Pinduoduo increased by 0.19%, Xpeng surged by 3.15%, Fangdd Network rose by 5.17%, and Bilibili rose by 0.35%.

• Banking stocks generally declined. The Philadelphia Stock Exchange KBW Bank Index fell by 1.78% to 120.35 points. The Dow Jones KBW Regional Banking Index dropped by 3.28% to 114.98 points. Morgan Stanley fell by 2.3%, Goldman Sachs declined by 2.02%, Barclays Bank dropped by 1.79%, Citigroup fell by 1.62%, UBS Group decreased by 1.52%, and Bank of America fell by 1.32%.

• Other key stocks: (1) SAP saw a 25% increase in cloud revenue in the third quarter. The company's ADR surged by over 5.3% in post-market trading. (2) Maersk ADR rose by 3.29%, raising its 2024 performance guidance again. The Red Sea crisis pushed up freight rates, leading to better-than-expected third-quarter performance. (3) Boeing increased by 3.11% after reaching a temporary agreement with the union on a new contract, potentially ending the strike if approved by workers. (4) Spirit Airlines surged by 53.06% after reaching an agreement with US Bank to extend the maturity date of notes in 2025 to December 23, providing more time for debt refinancing in 2025.

Most European stock indices and sectors experienced declines, with Germany and France both dropping by over 1%. ASML Holding caused a major drop in European tech stocks, making investors closely watch SAP's financial results, which turned out positive with a 25% increase in cloud revenue.

• The Europe STOXX 600 Index fell by 0.66% to 521.52 points. The Eurozone STOXX 50 Index declined by 0.90%, while the FTSEurofirst 300 Index dropped by 0.62%.

• Most sectors declined, with the insurance sector leading the way with a 1.1% drop, while the oil and gas sector rose by 0.6%. In component stocks, JDE Peet’s surged by 16.35% as investment holding company JAB is set to acquire 86 million shares. Semiconductor concept stocks generally declined, with Soitec, Infineon Technologies, and BE Semiconductor Industries all dropping by at least 2.0%.

• The Germany DAX 30 index fell by 1.00%, the France CAC 40 index fell by 1.01%, the Netherlands AEX index fell by 0.56%, the Italy FTSE MIB index fell by 0.71%, and the UK FTSE 100 index fell by 0.48%.

As the market's expectation for a decrease in interest rates by the central bank cools down, the yield on the 10-year US Treasury rose by over 11 basis points to nearly 4.2%, reaching the highest level since the end of July, and the 2-year yield rose to over 4%. The 10-year German bond yield rose by about 10 basis points:

• US Treasury: At the close, the yield on the 10-year US benchmark Treasury rose by nearly 12 basis points to 4.194%, reaching the highest level since late July. The two-year US Treasury yield rose by about 7 basis points to 4.027%.

• European Bonds: At the close, the 10-year German bond yield rose by 9.9 basis points to 2.282%, trading in the range of 2.187%-2.283% during the session. The two-year German bond yield rose by 7.4 basis points to 2.181%. The 10-year French bond yield rose by 12.3 basis points, the 10-year Italian bond yield rose by 15.2 basis points. The 10-year UK bond yield rose by 8.1 basis points to 4.137%, with the two-year yield rising by 5.1 basis points.

The US Dollar Index has risen for three consecutive weeks, with 14 out of the past 16 trading days showing gains. It rose over 0.4% on Monday, hitting 104 for the first time since August 1st. Non-US currencies fell across the board, with political uncertainty driving the Japanese Yen towards 151, the offshore Chinese Yuan dropping by nearly 200 points, and a Trump trade pushing Bitcoin up to over 69,000 USD to a three-month high before falling back below 68,000 USD:

• US Dollar: The US Dollar Index DXY rose by 0.45% at the close, to 103.961 points, trading in the range of 103.421-104.016 points during the day, accumulating a rebound of 3.56% since the end of trading on September 27th. The Bloomberg Dollar Index rose by 0.44%, to 1257.36 points, trading in the range of 1250.81-1257.70 points during the day.

• Non-US currencies: The Euro fell by 0.47% against the US Dollar, the British Pound fell by 0.49%, and the US Dollar rose by 0.16% against the Swiss Franc; among commodity currencies, the Australian Dollar fell by 0.71% against the US Dollar, the New Zealand Dollar fell by 0.70%, and the US Dollar rose by 0.23% against the Canadian Dollar. The Swedish Krona rose by 0.43% against the US Dollar, and the Norwegian Krona rose by 0.22%.

• On the research and investment strategy side: JPMorgan's data shows that due to investors betting on a rise in the US Dollar before the US election, demand for the dollar surged significantly last week. The most popular trades were buying the US Dollar and selling the Singapore Dollar and Australian Dollar.

• Yen: The yen fell 0.83% to 150.77 against the US dollar in the final trading session, touching a 9-week low of 150.89 yen at one point during the day. The euro rose 0.36% against the yen to 163.08 yen; the British pound rose 0.35% to 195.810 yen. Mizuho Securities believes that long-term political turmoil in Japan may prevent the Bank of Japan from raising interest rates. Political uncertainty before the House of Representatives election may lead to yen depreciation.

• Offshore Renminbi (CNH): The offshore renminbi fell by 183 points against the US dollar at the close, to 7.1364 yuan, with overall trading ranging between 7.1081-7.1380 yuan during the day.

• Cryptocurrencies: The largest cryptocurrency leader Bitcoin fell 1.40% to $67,825.00 at the close, while the second largest Ethereum rose 1.28% to $2,680.50, rising to $2,775.50 at one point during the day.

Concerns over disruptions in Middle Eastern oil supplies eased, leading to an 8.39% cumulative drop in US oil prices last week. On Monday, China lowered its benchmark interest rates, and Saudi Aramco CEO Amin Nasser's optimistic outlook on Chinese oil demand caused oil prices to rebound by nearly 2%:

• US Oil: WTI November crude oil futures closed up $1.34, up over 1.93%, at $70.56 per barrel. US oil continued to rise, with US stocks surging over 2.6% past $71 in the post-market trading session.

• Brent Oil: Brent December crude oil futures closed up $1.23, up over 1.68%, at $74.29 per barrel. Brent oil surged nearly 2.1% to nearly $74.60 in US stock trading after midday.

• In terms of research strategy, market focus has shifted to supply and demand fundamentals. Morgan Stanley predicts that due to weak oil demand, OPEC+ plans to resume crude oil supply in December, and the US continues to produce oil strongly, leading to a surplus of 1.3 million barrels per day by 2025.

• Natural Gas: NYMEX November natural gas futures closed up 2.39% at $2.3120 per million British thermal units. The European benchmark TTF Netherlands natural gas futures rose 1.65% to 39.950 euros per megawatt-hour. ICE UK natural gas futures rose 2.31% to 100.250 pence per thousand cubic feet.

Against the background of uncertainty in the US election, intensified tensions in the Middle East, and major central banks lowering interest rates, spot gold rose above $2740 to a historic high during the session, with spot silver hitting a twelve-year high. At the close, the dollar and US bond yields rose together, putting pressure on precious metals. Spot gold turned lower, and spot silver gave back most of its gains. London industrial metals mostly fell:

• Gold: COMEX December gold futures rose 0.17% to $2734.70 per ounce at the close, rising to $2755.40 per ounce during the session to hit a historical high. Spot gold in the US stock market soared over 0.7% in early trading, surpassing the $2740 mark, again hitting a historical high, and fell 0.06% to $2719.76 per ounce at the close.

• Silver: COMEX December silver futures rose 2.29% to $33.995 per ounce at the close. Spot silver soared over 1.8% to nearly $34.30 before the US stock market opened, and rose 0.18% to $33.7825 per ounce at the close.

• On the news side: UBS analyst Giovanni Staunovo predicts that with further rate cuts by the Fed, the price of gold could reach $2900 per ounce in the next 12 months. RJO Futures strategist Pavilonis said we may see a slowdown in the gold price increase, while silver's rise might accelerate and catch up with gold. Bank of America analyst Michael Widmer said gold could become the "ultimate safe-haven asset," rising to $3000 per ounce in the next few months.

• Stronger dollar led to a general decline in London industrial metals: Copper fell over 0.68% to $9559 per ton. Aluminum fell by $16 to $2596 per ton. Zinc fell by $14 to $3076 per ton. Lead fell by $16 to $2056 per ton. Nickel fell by $192, dropping more than 1.13% to $16705 per ton. Tin fell by $297, down about 0.95% to $31016 per ton. Cobalt remained steady at $24300 per ton.

• Shanghai Zinc night trading fell over 1.7%, aluminum oxide night trading rose by 2.18%, US stocks rose to 5003 RMB in early trading, breaking through the 5000 mark to continue hitting historic highs for the seventh consecutive week. COMEX copper futures fell by 0.58%, to $4.3590 per pound.

Editor / jayden