• European bourses are posting modest gains this morning, Stoxx 50 +1.0%, after well-received banking updates & manufacturing PMI upside overshadowing services slumping further
• Stateside, ES +0.2%, NQ U/C, DJIA +0.3%
• Markets saw little reaction to the final Presidential Debate with US equity futures, the Dollar and UST futures steady throughout the whole broadcast as the two participants largely stuck to their scripts
• Intel reported after-market, -9.5% in pre-market, raising FY guidance with revenue & EPS broadly in-line
• Looking ahead US PMIs (Flash); S&P reviewing Greece, UK & Italy

PRESIDENTIAL DEBATE

Markets saw little reaction to the final Presidential Debate with US equity futures, the Dollar and UST futures steady throughout the whole broadcast as the two participants largely stuck to their scripts. Overall, the debate was structured and civilised with the two candidates sticking to the two-minute rule and touching upon a range of topics including the fight against COVID-19, national security, the economy alongside race and climate.

For all the market-relevant comments from the debate click here

In terms of highlights, US President Trump said a COVID-19 vaccine is ready and will be announced in the coming weeks, but it is not a guarantee. President Trump said Johnson & Johnson (JNJ), Moderna (MRNA) and Pfizer (PFE) are doing very well. Democratic Candidate Biden did not rule out future shutdowns and said measures need to be implemented to confront the virus, whilst resources are needed to open safely.

On national security, Biden said any country interfering with US elections will pay a price, and on China policy, said he will make China play by international rules, whilst a meeting with North Korea will only happen if they reduce nuclear capacity. President Trump said US has a very good relationship with North Korea, whilst stating that China devalued their currency.

On US stimulus, President Trump reiterated House Speaker Pelosi does not want to approve stimulus, to which Biden responded Republican leader in the Senate said he cannot pass stimulus.

Instant poll among debate watchers - CNN: 53% Biden won the debate vs 39% for Trump. YouGovAmerica: Biden 54% vs Trump 35%. Data Progress: Biden 52% vs. Trump 41% (Twitter)

CORONAVIRUS UPDATE

Infusing hospitalized COVID-19 patients with blood plasma from people who recovered from the disease had no effect on whether patients got sicker or died, according to the first completed randomized trial of the treatments, according to Stats News. (Stats News)

Germany reported 11,242 (Prev. 11,287) new COVID-19 cases and 49 (Prev. 30) additional deaths, according to RKI. (Newswires)

ASIA

Asia-Pac equities traded mostly higher after a lukewarm handover from Wall Street whereby all three majors closed in the green but the Nasdaq narrowly underperformed amid losses across the tech sector, whilst Intel shares slumped almost 10% after-hours post-earnings amid new weakness in its data center business. US equity futures reopened with mild gains before drifting modestly lower during the Presidential Debate, albeit with no explicit comment driving price action at the time as the two candidates stuck to their respective scripts. Thereafter, following the more sanguine debate, ES, NQ and YM nursed losses to trade higher by 0.1-0.2%. ASX 200 (-0.1%) remained the laggard as the index was subdued by its mining sector. Nikkei 225 (+0.2%) extended on gains despite the firmer Yen, with outperformance in the industrial names, whilst Mitsubishi Heavy Industries stood as the outperformer amid source reports the group is closer to a final decision on freezing regional Spacejet program. KOSPI (+0.2%) traded between gains and losses before gaining a firmer footing in positive territory. Hang Seng (+0.5%) and Shanghai Comp (-1.0%) eked mild amid gains initially another PBoC liquidity operation, whilst comments from Chinese President Xi did little to sway the indices; though this did wane for the Shanghai index as the session came to a close. Finally, 10yr JGB futures continued to track the broader fixed income futures complex.

PBoC sets USD/CNY midpoint at 6.6703 vs. Exp. 6.6735 (Prev. 6.6556). (Newswires) PBoC injects a net CNY 20bln via 7-day reverse repos at a maintained 2.20% rate. PBoC injected CNY 220bln for the week via open market operations.

China's FX regulator said the CNY is more stable than expected and has maintained relatively high flexibility; CNY will still fluctuate around a reasonable balanced level. China will step up monitoring of inbound and outbound cross border capital flows. (Newswires)

China is moving a step closer to easing capital controls within the Greater Bay Area by setting the amount of fund flows allowed under an investment scheme with Hong Kong and Macau from early next year. (SCMP)

Chinese Commerce Ministry says it will impose temporary anti-dumping measures on some rubber imports from US, EU and South Korea from Oct 28. (Newswires)

Japanese government expert panel proposes extending New Year holiday to Jan 11th, according to Kyodo. (Newswires)

Japanese CPI, Core Nationwide YY (Sep) -0.3% vs. Exp. -0.4% (Prev. -0.4%) (Newswires) Japanese CPI Index Ex Fresh Food* (Sep) 101.3 (Prev. 101.3)

New Zealand CPI QQ (Q3) 0.7% vs. Exp. 0.9% (Prev. -0.5%) (Newswires) New Zealand CPI YY (Q3) 1.4% vs. Exp. 1.7% (Prev. 1.5%)

US

White House Chief of Staff Meadows says COVID-19 relief talks have entered a new phase with committee chairs looking at language, President Trump is willing to go bigger on a deal - including direct payments to families, via CNN. (Newswires)

US House Speaker Pelosi said Democratic lawmakers are telling her they do not want a pre-election vote on a potential relief bill unless the Senate is going to take it up before the election, via Politico's Sherman. (Twitter)

Sen. Sanders is hoping to be a part of Biden’s potential administration; has expressed an interest in becoming Labor secretary, Politico reports. (Politico)

UK/EU

UK Trade Secretary Truss said she is confident a trade deal can be struck with the US regardless who wins the US election. (Newswires)

UK and Japan have formally signed the trade deal agreed last month. (Newswires)

EU Markit Manufacturing Flash PMI (Oct) 54.4 vs. Exp. 53.1 (Prev. 53.7)

-        Comp Flash PMI (Oct) 49.4 vs. Exp. 49.3 (Prev. 50.4)

-        Services Flash PMI (Oct) 46.2 vs. Exp. 47.0 (Prev. 48.0)

German Markit Manufacturing Flash PMI (Oct) 58.0 vs. Exp. 55.1 (Prev. 56.4)

-        Comp Flash PMI (Oct) 54.5 vs. Exp. 53.2 (Prev. 54.7)

-        Services Flash PMI (Oct) 48.9 vs. Exp. 49.2 (Prev. 50.6)

UK Flash Services PMI (Oct) 52.3 vs. Exp. 54.0 (Prev. 56.1)

-        Manufacturing PMI (Oct) 53.3 vs. Exp. 53.1 (Prev. 54.1)

-        Composite PMI (Oct) 52.9 vs. Exp. 53.9 (Prev. 56.5)

UK Retail Sales MM* (Sep) 1.5% vs. Exp. 0.4% (Prev. 0.8%); YY* (Sep) 4.7% vs. Exp. 3.7% (Prev. 2.8%)

-        Ex-Fuel MM* (Sep) 1.6% vs. Exp. 0.5% (Prev. 0.6%); YY* (Sep) 6.4% vs. Exp. 5.0% (Prev. 4.3%)

GEOPOLITICAL         

Chinese President Xi said China will not allow anybody or any force to separate China's territory. (Newswires)

US sanctioned three new Iranian organisations in relation to alleged disinformation campaign - sanctions include five Iranian institutions, including the Revolutionary Guard according to Sky News Arabia. (Newswires/Twitter)

EQUITIES

European equities (Eurostoxx 50 +0.9%) trade higher across the board after a pick-up in sentiment shortly after the cash open. It’s been a busy morning of data for the region with French PMIs, highlighting the diverging fortunes of the services and manufacturing sectors with the former extending its advances into negative territory, leaving the composite reading for France at 47.3 vs. prev. 48.5. Thereafter, Germany posted a strong showing for its crucial manufacturing sector (58.0 vs. prev. 56.4) , which helped extend the upside in the DAX (+0.7%), albeit declines in the services sector acted as a weight on the still-positive composite reading (54.5 vs. prev. 54.7). The Eurozone-wide release conformed to the overall viewpoint that despite the manufacturing industry holding up in the early stages of Q4, the services sector is clearly falling victim to the resurgence of the virus. IHS Markit have cautioned that “the eurozone is at increased risk of falling into a double-dip downturn”. Asides from this morning’s macro data releases, there have been a raft of corporate updates with solid earnings from Barclays (+7.3%) prompting outperformance of the banking sector after the Co. reported Q3 profit-before-tax of GBP 1.1bln vs. Exp. GBP 0.5bln amid a notable decline in bad loan provisions and strong performance in its consumer business. Elsewhere, energy names are also firmer in a continuation of yesterday’s advances despite crude prices being relatively unchanged on the session. Earnings from Daimler (+2.0%) and Renault (+1.6%) have supported the autos sector, whilst 9M results from Michelin (+2.6%) have also served as a source of encouragement from the broader industry. In a busy morning of earnings for the CAC 40 (+1.0%), Accor (+4.5%) are a clear outperformer despite results highlighting that impact on activity from the COVID crisis, to the downside in France, Kering (-2.6%) lags amid weak performance in its Gucci division. Elsewhere, notable laggards post-earnings include ABB (-2.8%) and Electrolux (-2.0%) with the former acting as a weight on the underperforming SMI (U/C).

Apple (AAPL) global pre-orders for the iPhone 12 were at least twice as high in the first 24-hour period vs. iPhone 11's pre-order period, SCMP

Facebook (FB) - A federal antitrust probe targeting Facebook appears to have entered its late stages, according to sources cited by WaPo. (Washington Post)

Intel (INTC) Q3 2020 (USD): Adj. EPS 1.11 (exp. 1.11); Revenue 18.3bln (exp. 18.25bln). Raises FY guidance. Client Computing Group: 9.8bln (exp. 8.93bln). Data Center Group: 5.9bln (exp. 6.07bln). (Newswires) Anticipates Q4 COVID impact will drive demand in cloud service providers market segment to moderate; also expects impacts on demand to the Internet of Things Group in Q4 Shares fell 9.6% after market.

Wells Fargo (WFC) is reportedly mulling the sale of its asset management business which could fetch over USD 3bln, according to sources. (Newswires)

FX

USD – It remains to be seen whether the Greenback can withstand renewed downside pressure after overcoming several wobbles late yesterday and extending recovery gains overnight, but for now the signs are looking ominous as certain G10 rivals rebound on a combination of fundamental and technical factors. Indeed, the index is beating a relatively hasty retreat from a 93.129 peak to 92.724, thus far, ahead of Markit’s US flash PMIs that may or may not help the Dollar regroup.

AUD – The Aussie is back in the ascendency and outperforming with some assistance from encouraging PMIs and the fact that it survived a test of support ahead of 0.7100 vs its US counterpart in the form of the 100 DMA (0.7106) and 1.0650 or so against the Kiwi. However, 0.7150 and 1.0700 may cap further upside barring another pronounced upturn in broad risk sentiment.

CHF/JPY/GBP/EUR/NZD – All firmer vs the Buck, either by default or in their own right, as the Franc revisits 0.9050 from lows not far off 0.9100, Yen approaches 104.50 compared to sub-104.90 and Pound bounces from circa 1.3050 to just over 1.3100 at one stage. Note, Japanese CPI was slightly less deflationary than expected and UK retail sales much stronger than forecast in contrast to rather mixed preliminary PMIs, but none of these macro releases seemed to impact, though Cable may be drawn to unusually large option expiry interest from 1.3090 to 1.3100 in just over 1 bn. Conversely, the Euro appeared to derive some from the Eurozone surveys revealing faster than anticipated activity in Germany’s manufacturing sector that boosted the composite and pan prints to partly offset misses in services vs consensus. Eur/Usd has subsequently accelerated through the 50 DMA (1.1795), 1.1800, a Fib retracement level aligning with the 100 HMA (at 1.1806) to just shy of 1.1850, but could be hampered by circa 1.4 bn expiries between 1.1840-50. Back down under, the Kiwi is inching closer to 0.6700 even though NZ CPI was weaker expected in Q3.

CAD/SCANDI/EM – The Loonie, Norwegian Krona and Swedish Crown are rather lethargic and rangebound, but the Turkish Lira is back on the rack in wake of Thursday’s CBRT shock decision to leave the main repo rate unchanged, with Usd/Try looking primed to have another close look at 8.0000.

Notable FX Expiries, NY Cut:

-        EUR/USD: 1.1750-55 (1.26BLN), 1.1800 (2.0BLN), 1.1830 (426M), 1.1840-50 (1.43BLN), 1.1975 (518M), 1.2000 (1.4BLN)

-        GBP/USD: 1.2650 (670M), 1.3090-00 (1.14BLN), 1.3200 (353M)

FIXED INCOME

Solid manufacturing PMIs, and especially strong German print may have contributed to the pull-back in bonds as they overshadowed or counterbalanced the underperformance in services. Moreover, bumper UK retail sales data hampered Gilts in early Liffe trade and Bunds may have lost momentum technically having extended recovery gains to 33 ticks at 175.52, but failing to gather enough momentum to challenge stronger resistance above (ie Thursday’s 175.73 Eurex high that also coincides with a Fib retracement level from the fall since last Friday). Allied to firm stocks, albeit as a more intermittent external influence, the 10 year EU benchmarks have retreated to 175.12 and 135.13 for losses of 7 and 24 ticks, in stark contrast Eurozone periphery debt that has regrouped after some supply-related concession of late. Elsewhere, US Treasuries have also backed off again awaiting Markit’s preliminary PMIs and any more developments on the fiscal stimulus front.

COMMODITIES

WTI and Brent futures have been somewhat choppy throughout the session but largely following the directional performance of the equity complex, albeit with magnitudes more contained and the benchmarks only modestly positive at present. Fundamental drivers explicitly for the complex remain sparse aside from the ever-present COVID-19 demand concerns and OPEC+ related supply issues. Instead, geopolitical reports could draw attention in the sessions ahead with  reports today indicating that the conflict in Libya has been resolved with all sides agreeing to a permanent ceasefire – a factor of note given the frequent force majeures for some of the nations most significant facilities. Additionally, tensions are seemingly rising regarding Iranian oil sanctions as WSJ reports indicate that US Officials are frustrated that allies are not taking enough aggressive action to enforce the sanctions; amid reports that Persian Gulf waters are being utilised as a waypoint for smugglers out of Iran. Looking ahead, the session’s only crude event of note is the weekly Baker Hughes rig count which last week saw a 12-rig increase for oil facilities. Action for spot gold has once again been dictated by the USD with the precious metal gleaning support from the DXY’s gradual demise throughout the session. At present, the metal is firmer by around USD 6/oz and in proximity to session highs above the relatively contained levels seen in APAC hours.

US Democratic Candidate Biden's campaign reportedly told US miners it supports bolstering domestic metal production used in electric vehicles, sources stated. The stance is seen as boosting Glencore (GLEN LN) and Antofagasta (ANTO LN) copper units in US. (Newswires)

Russian Energy Minister Novak says Russian oil output is seen at 507mln/T in 2020, exports at 225mln/T. (Newswires)

Persian Gulf waters, off Iraq, have reportedly become a new important waypoint for Iranian oil smugglers who are attempting to avoid US sanctions with US officials said to be frustrated that allies aren't acting to enforce the curbs more aggressively. (WSJ)

UN's Libyan mission believes parties have agreed to a permanent ceasefire in all areas of Libya. (Newswires)