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Market Update – October 3 – Risk off bites across asset classes

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Starting with APAC, the RBA has just unsurprisingly kept rates steady in Governor Bullock’s inaugural meeting with the statement largely a carbon copy from the Lowe era (”inflation is coming down, the labour market remains strong and the economy is operating at a high level of capacity utilisation”): AUD continues to decline this month and is -0.76% against the USD right now, followed by the KIWI which marks -0.63%. The JPY, which is one step away from 150, is surprisingly strong this morning, flat against the USD, as the rhetoric about the possibility of intervention continues, this morning from Japan’s Finance Minister Suzuki. The JPN225, for its part, is down -1.85% and back to last June’s levels, but the whole of APAC is suffering: Hong Kong and China are back to trading and the former is down -3.04%, weighed down by developers and the energy sector. Moreover, the IMF has lowered growth expectations for the area.

US Yield Curve

More broadly, we are seeing a series of risk-off movements, evident in the strength of the USD which, after +0.75% yesterday, is now within touching distance of 107. Yesterday afternoon’s decent US ISM data helped long end yields continue to rise (10-Year at 4.691%) while continued weakness in Eurozone manufacturing sank the EURUSD below 1.05. European stock markets suffered more than American ones, which showed more indecision and ended the day mixed. But while the mega-cap filled Nasdaq finished at +0.83%, the RUSSELL 2000 index of small to mid-cap companies is now negative YTD. Finally, the weakness in precious metals was significant, with Silver plummeting -5.81% below $21; energy also sold off, with OIL down for four consecutive sessions and UKOIL down 8% from last Thursday’s high.

  • FX – USDIndex +0.24% @ 106.86 after +0.75% yesterday; AUDUSD -0.73% @ 0.6316, NZDUSD -0.56%. YEN strengthens 0.03%, 149.82, USDCNH steady at 7.32. EURUSD -0.08% @ 1.0469 and CABLE at 1.20 handle after yesterday’s heavy session.
  • Stocks – US Futures fractionally negative (US500 -0.12%, US100 -0.17%, US30 -0.11%). RUSSELL 200 turned negative YTD. EU futures -0.2% on average after both GER40 and FRFA40 lost -0.9% yesterday. APAC heavy: HK -3%, CHINA50 -1.53%, JPN225 -1.90%.
  • Commodities – USOil -0.28% at $88.35, UKOil -0.44%, Wheat -0.13%, Corn -0.61%.
  • Metals – Gold -0.27% @ $1822, XAGUSD @ 21.03, Copper -1.03%, Palladium -0.35%.

Today: highlights include US IBD/TIPP & JOLTS, Swiss CPI, Australian PMI (Final), Fed’s Bostic, ECB’s Lane & Valimaki.

Interesting Mover: Copper -1.0% @ $3.6065, is clearly losing the $3.70 area and below the $3.62 support, has been rejected by its 50MA and lost 1yr long uptrend, $3.53 is its next relevant support.

 

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Marco Turatti

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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