• European cash indices have been choppy but futures have staged a modest recovery after yesterday’s COVID-19 concerns amid the busiest day of earnings season for Q3
• However, crude has continued to deteriorate throughout the morning dropping below multiple key figures
• Regeneron (REGN) COVID-19 outpatient trial prospectively demonstrates that its antibody cocktail REGN-COV2 significantly lowered virus levels
• House Speaker Pelosi has sent a letter to Treasury Secretary Mnuchin listing all the areas that remain unsolved in the negotiation; as such, attributing blame to the White House
• OPEC+ are reportedly mulling extending oil output cuts at current levels through to end-March, according to Energy Intel's Bakr
• BoJ left policy measures unchanged as expected; FX more broadly features a firmer USD with peers mixed but relatively contained
• Looking ahead highlights include US GDP (Advanced), Initial/Continued Jobless Claims. Japanese Unemployment, ECB & BoJ Rate Decision, ECB’s Lagarde
• Earnings: Amazon, Apple, Comcast, Facebook, Twitter, Moderna

CORONAVIRUS UPDATE

German COVID-19 cases +23,553; a record increase vs. y-day 14,964. (Newswires)

Regeneron (REGN) COVID-19 outpatient trial prospectively demonstrates that its antibody cocktail REGN-COV2 significantly lowered virus levels and need for further medical attention, while it added that REGN-COV2 met primary and key secondary endpoints. Treatment with REGN-COV2 reduced COVID-19 related visits by 57% through day 29 and treatment lowered COVID-19 related medical visits by 72% in patients with one or more risk factors, while REGN-COV2 was well tolerated and serious adverse effects were numerically more frequent with placebo than REGN-COV2 treatment. (Newswires)

Eli Lilly (LLY) BAMLANIVIMAB trial data in COVID-19 outpatients showed it may be effective by reducing viral load, symptoms and risk of hospitalization in outpatients. (Newswires)

French government advisor says they do not think the nation will reach its target for lowering COVID infections by December 1st. (Newswires)

Senior UK government sources expect the verdict on whether Pfizer's (PFE) COVID-19 vaccine works will be available prior to Oxford University's vaccine. (Times)

ASIA

Asian equity markets traded mostly lower amid jitters following the bloodbath on Wall St where all major indices declined more than 3% and the DJIA fell over 900 points as risk appetite was decimated by concerns regarding lockdowns in France and Germany, whilst heavy losses were also observed in the tech sector. In addition, pre-election caution and comments from NIH's Fauci that a vaccine won't be available until January at the earliest added to the downbeat tone, although US stock index futures nursed some losses overnight after encouraging updates from both Regeneron and Eli Lilly regarding their COVID-19 treatment trials and with the US said to provide Huawei a lifeline by allowing more companies to supply the Chinese tech giant with components as long as it is unrelated to 5G. Nonetheless, Asian bourses weakened with tech and commodity-related sectors the underperformers in the ASX 200 (-1.6%) and financials were also pressured after ANZ Bank reported a 42% decline in full-year profit and Westpac reached an agreement to settle a BBSW class action in US. Nikkei 225 (-0.4%) was subdued following weak retail sales data and as participants awaited the BoJ policy announcement, which proved to be a damp squib as the central bank maintained policy settings as expected and continued to signal a lack of urgency for immediate support, although some of the losses have been pared amid mild currency outflows and as earnings supported the likes of Sony and Hitachi, while the KOSPI (-0.8%) suffered after Samsung Electronics failed to benefit from its final Q3 results which despite printing an increase from the prior year, it also flagged a decline in chip and mobile profitability for Q4. Hang Seng (-0.5%) and Shanghai Comp. (+0.1%) were cautious ahead of several blue-chip earnings including the first of the big 4 banks and with participants looking out for details of the 5-year plan when the 4-day plenum concludes today. Finally, 10yr JGBs failed to benefit from the broad risk-aversion and instead tracked the recent declines in T-notes with demand constrained amid the BoJ policy announcement in which the central bank provided a somewhat balanced tone that suggested it was likely to remain on the fence on future measures.

PBoC injected CNY 140bln via 7-day reverse repos at a rate of 2.20% for a net injection of CNY 90bln. (Newswires) PBoC set USD/CNY mid-point at 6.7260 vs. Exp. 6.7219 (Prev. 6.7195)

Major Chinese banks have been swapping USD for CNY in the onshore forward market, as well as purchasing USD vs. CNY in late evening sessions, according to traders. (Newswires)

PetroChina (0857 HK) Quarterly IFRS attributable CNY 40.05bln vs. prev. CNY 8.83bln. (Newswires)

US is reportedly permitting an increasing number of companies to supply components to Huawei, as long as it is not related to the 5G business. (FT)

BoJ kept monetary policy settings as expected with bank rate kept at -0.10% and QQE with YCC maintained to flexibly target 10yr JGB yields at around 0% with the decision on YCC made by 8-1 vote as Kataoka remained the lone dissenter. BoJ stated that Japan's economy is likely to improve as a trend but notes extremely high uncertainty over economic and price outlook, while it added that consumer prices to decline for the time being but turn positive as the economy improves and will gradually accelerate pace of increase, while it stated that Japan's economy remains in a severe state but has begun to pick up and that exports and output are increasing. Furthermore, the BoJ downgraded its forecast for Real GDP and Core CPI in the Outlook Report for the current fiscal year but upgraded forecasts for next fiscal year. (Newswires)

Japanese Retail Sales (Sep) M/M -0.1% vs. Exp. 1.0% (Prev. 4.6%). (Newswires) Japanese Retail Sales (Sep) Y/Y -8.7% vs. Exp. -7.7% (Prev. -1.9%)

US

House Speaker Pelosi has sent a letter to Treasury Secretary Mnuchin listing all the areas that remain unsolved in the negotiation; as such, attributing blame to the White House, via Politico. (Poliico)

US House Speaker Pelosi said hopefully President Trump will come to the table as he sees the stock market fall, while she reiterated that they haven't stopped working on stimulus, while House Speaker Pelosi later noted that details of the coronavirus package could change after the election. (MSNBC/WSJ)

UK/EU

UK Whitehall sources state that there has indeed been some progress on Brexit, chiefly on governance issues. However, there are still significant differences on the issue of non-regression clauses, according to Politico; Brussels wants clear commitments from Britain that it won’t try to break away from the EU’s level playing field. And so far there is no movement on fish, Playbook is told, with the two sides still far apart. (Politico)

UK Trade Minister Truss is said to reject a 'Britain First' trade policy and will layout the principles of the country’s future trade policy, as well as slam the ‘pernicious’ trading practices of US and EU. (Newswires)

More than 500k companies in the UK were in significant distress during 3 months to September, according to reports citing data on court orders to pay off debts. (FT)

EQUITIES

European equities (Eurostoxx 50 flat) have been relatively choppy thus far with regional indices unable to stage any meaningful recovery from yesterday’s heavy losses. Ahead of the cash open, futures at one stage suggested that European equities would look to claw back some of the declines seen yesterday, however, this has failed to materialise thus far as market participants fret over the economic impact of recent nationwide lockdown measures taken by France and Germany. It has been an exceptionally busy morning of earnings in Europe with divergences between different industries mostly a by-product of large-cap corporate updates. Tech has been one of the top performers thus far in the wake of yesterday’s tech-heavy losses on Wall St, with sentiment for the sector also aided by earnings from ASM International (+4.1%) who subsequently raised Q4 guidance amid strong demand. Capping gains for the tech sector is Nokia (-16.6%) after Q3 results fell short of analyst estimates and the Co. cut its FY profit outlook amid declining market shares in certain regions. Despite losses in the crude complex, oil & gas names have seen support throughout the session amid Q3 earnings from Shell (+2.1%) which saw the Co. exceed estimates for adjusted earnings and lift its dividend. Banking names are lower on the session amid losses in Credit Suisse (-6.0%) after Q3 profits missed analyst expectations, overshadowing the Co.’s decision to increase its dividend by 5% for 2020 and schedule CHF 1.5bln of share buybacks for next year. Lloyds (+3.7%) have provided some reprieve for the sector after the Co. beat on Q3 profits and noted a surge in the demand for mortgages. Volkswagen (+3.1%) are higher on the session after Q3 profits were bolstered by increasing auto demand from China, offsetting losses elsewhere. Of note for telecom names, (asides from Nokia who are also in the Stoxx 600 tech index), BT (+5.4%) and Orange (+4.6%) are firmer post-earnings, whilst Telefonica (-4.5%) are a laggard in the sector after Q3 results underwhelmed. Finally, AB Inbev (+2.9%) have acted as a source of support for the food & beverage sector after Q3 revenues beat estimates and the Co. stated that H2 performance will be better than H1.

AB InBev (ABI BB) – Q3 revenue USD 12.81bln vs. Exp. USD 11.79bln, EBITDA USD 4.89bln vs. Exp. USD 4.43bln, normalised EPS USD 0.79/shr; total volumes +1.9%. Expect H2 performance to be better than H1. (Newswires)

Airbus (AIR FP) – Q3 revenue EUR 11.2bln vs. Exp. EUR 11.4bln, net income EUR 2.7bln vs. Exp. EUR 2.2bln, adj. EBIT EUR 820mln vs. Exp EUR 705mln; EBIT recognises a restructuring provision of EUR -1.2bln. No new guidance issued regarding commercial deliveries of EBIT. Commercial aircraft orders 300 vs. Prev. 127 YY. Order backlog of 7.4k craft. (Newswires)

Credit Suisse (CSGN SW) – Q3 revenue CHF 5.2bln vs. Exp. CHF 5.4bln, CET1 ratio 13% vs. Exp. 12.55%, pretax profit CHF 0.803bln vs. Exp. CHF 1.049bln, net profit CHF 546mln vs. Exp. CHF 679mln. 2021 share buyback programme of as much as CHF 1.5bln. Well positioned to drive further balance sheet growth. (Newswires)

LVMH (MC FP) confirm they are to purchase Tiffany (TIF) for USD 131.50/shr in cash. (Newswires)

Nokia (NOKIA FH) – Q3 revenue EUR 5.29bln vs. Exp. EUR 5.44bln, operating profit EUR 486mln vs. Exp. EUR 494mln, operating margin 9.2% vs. Prev. 8.4% YY. FY20 outlook: diluted EPS of EUR 0.23/shr vs. Prev. forecast EUR 0.25/shr. 2021 performance is expected to be challenging and as such more change is required, will provide a long-term outlook update in March. (Newswires)

Shell (RDSA LN) – Q3 revenue USD 44.7bln vs. Exp. USD 62.6bln (Prev. USD 32.5bln), EPS USD 0.06 vs. Prev. USD 0.73 YY. Announce a dividend of USD 0.1665/shr for Q3-2020 and thereafter annually. (Newswires)

Volkswagen (VOW3 GY) – 9-month revenue EUR 155.5bln vs. Prev. EUR 186.6bln, operating income EUR 2.4bln vs. Prev. EUR 12.4bln. Confirms FY20 guidance. (Newswires)

FX

AUD/NZD/CAD – Far from all change in terms of the general market tone that remains suppressed and highly contingent on daily coronavirus developments, but a comparative air of calm has returned following Wednesday’s FTQ. As such, the so called cyclical, activity or high beta currencies are on a more even keel, albeit still precarious and prone to any headline bearing bad news on the COVID-19 front that could have adverse economic implications on top of the obvious social and human cost. Aud/Usd is modestly firmer and straddling 0.7050, Nzd/Usd is pivoting 0.6650 with some independent traction via improvements in NBNZ business confidence and especially the outlook for activity, while Usd/Cad has pared back from post-BoC highs to rotate around 1.3300 even though crude prices remain depressed. Next up for the Loonie, Canadian average weekly earnings and building permits, while the Aussie might be mindful of a decent 1 bn expiry option in the Aud/Jpy cross at 73.20.

JPY/GBP/CHF/EUR - All narrowly mixed against the Dollar, as the Yen continues to fend off pressure below 104.50 that coincides with a key Fib level and has capped the pair for the last 2 trading sessions. However, 104.00 remains elusive and Usd/Jpy may remain supported into the round number given expiry interest at the strike in 1.8 bn. For the record, nothing new from the BoJ overnight, but top tier Japanese data looms in the form of CPI, jobs and IP. Elsewhere, Sterling continues to encircle 1.3000 on hopes of a key Brexit breakthrough and the Pound is outperforming vs the Euro just shy of 0.9000 compared to 0.9050 at the other extreme even though latest reports on UK-EU trade talks appear less positive than yesterday. Perhaps the proximity of 1.1 bn expiries between 0.9050-60 are impacting, or the fact that Eur/Usd is treading cautiously into the ECB within a 1.1758-26 range and flanked by expiry interest (1.3 bn from 1.1750-55 and 1.5 bn from 1.1725-15). Meanwhile, the Franc is largely tracking Buck moves on the 0.9100 axis as the DXY meanders from 93.560 to 93.237 in the run up to advance US Q3 GDP, weekly IJC tallies, pending home sales and more heavyweight corp earnings.

SCANDI/EM – The aforementioned recoil in oil has hit the Nok back below 11.0000 vs the Eur and beyond recent lows, while in contrast the Cnh and Cny are both paring losses after another weaker PBoC midpoint fix and reports of Chinese bank selling of the onshore Yuan against the Greenback in spot and forward terms. However, the Try is struggling again just off sub-8.3200 record lows vs the Dollar and Brl looks set for catch-up declines after the BCB held rates last night, as expected, but acknowledged strong upside inflation pressure in the short term that requires close attention.

Notable FX Expiries, NY Cut:

-        EUR/USD: 1.1700 (734M), 1.1715-25 (1.5BLN), 1.1750-55 (1.3BLN), 1.1765-70 (770M), 1.1800 (372M)

-        EUR/GBP: 0.9000 (453M), 0.9050-60 (1.1BLN), 0.9110 (700M)

-        USD/JPY: 103.20-25 (1.6BLN), 103.60 (1BLN), 104.00 (1.8BLN), 104.40-50 (700M), 104.75 (523M), 105.15 (600M), 105.25 (1.3BLN)

-        AUD/JPY: 71.60 (727M), 73.20 (1BLN), 76.35-40 (2.4BLN)

New Zealand NBNZ Business Confidence (Oct) -15.7% (Prev. -28.5%) New Zealand NBNZ Activity Outlook (Oct) 4.7% (Prev. -5.4%)

FIXED INCOME

Bunds have extended their recovery from Eurex lows to 176.24 and seem to be dragging Gilts and US Treasuries up a bit in their slipstream even though equities have overcome several wobbles to maintain a degree if recovery momentum in contrast to oil that is looking increasingly roiled on bearish supply-demand dynamics alongside technical impulses. Moreover, debt futures may be decoupling from stocks again due to asset rebalancing and duration requirements for month end on Friday awaiting interim direction from the ECB and/or US data, but still keeping a close vigil on the spread of COVID-19 that will be pivotal for the global economy as 2020 draws to a close, not to mention spill-over into next year.

COMMODITIES

WTI and Brent front month futures have come under pronounced pressure this morning as the complex was unable to partake in the European-earnings fuelled bounce in the equity futures around the cash equity open on the back of a number of well-received European earnings. As such, throughout the European morning the crude benchmarks have continued to deteriorate moving below the psychological USD 37/bbl & 36/bbl and USD 39/bbl for WTI and Brent respectively; and most recently in proximity to the USD 36/bbl & USD 38/bbl marks. Updates throughout the session explicitly for the crude complex have been sparse after the BSEE report showed further oil outage within the Gulf of Mexico but Storm Zeta is now forecast to continue weakening throughout the day and as such, assuming no damage occurred, platforms should begin returning to service in the near-term. Elsewhere, on the OPEC+ front Energy Intel reports indicate the cartel are considering extending oil output cuts at their current levels through to the end of March; reports which will likely garnering more focus as we approach the next JMMC and full OPEC+ gathering next month. Moving to metals, spot gold is essentially flat on the day perhaps as it struggles to garner clear direction from sentiment this morning which is choppy and diverging somewhat amongst asset classes thus far. Price-wise, the precious metal is little differed on the session around the USD 1875/oz mark.

OPEC+ are reportedly mulling extending oil output cuts at current levels through to end-March, according to Energy Intel's Bakr. (Twitter)

NHC said Zeta weakened as it moved over south-eastern Mississippi but still noted life-threatening surge and strong winds, while it later added that Zeta should decay into a tropical storm overnight and into a non-tropical gale-force low on Thursday morning. (Newswires)

Shell announced it is shutting-in production at its Appomattox asset due to downstream impacts from Zeta. (Newswires)

India Q3 gold demand fell 30% to 86.6 tons due to COVID-19 lockdown, although gold consumption could improve in Q4 on festival shopping and pent up demand, according to the World Gold Council. (Newswires)