• European bourses have pared back the US-induced downside post multiple large-cap earnings in the after market; ES -0.7%, NQ -1.2%
• Nasdaq is weighed on in-spite of Apple, Alphabet, Amazon, Facebook and Twitter all beating on top and bottom lines
• Elizabeth Warren is reportedly set to request to become Joe Biden’s Treasury Secretary in the event that the former VP wins the upcoming election, Politico
• EZ Q3 GDP beat substantially, as flagged by President Lagarde yesterday while headline flash CPI was in-line for October
• FX features a modestly downbeat USD as sentiment gradually lifts, but remains subdued/neutral at best; major peers are relatively rangebound
• Looking ahead highlights include US PCE, Personal Income & Chicago PMI, ECB’s de Guindos
• Earnings: Exxon, Phillips, AbbVie, Colgate-Palmolive

CORONAVIRUS UPDATE

European Commission President Von der Leyen said the virus spread will overwhelm the healthcare system if we do not act quickly and commission has made EUR 220mln available to fund cross-border transfer of patients. (Newswires)

UK PM Johnson is reportedly under increasing pressure to impose a lockdown before and after Christmas but allow easing of restrictions during the Christmas holidays, as sources close to the government warned that the current 3-tier system may not be sufficient to contain number of infections. (Telegraph)

ASIA

Asian equity markets weakened heading into month-end and after US stock index futures faded the recovery seen on Wall Street amid disappointment from the big tech earnings despite Apple, Alphabet, Amazon, Facebook and Twitter all beating on top and bottom lines. Apple shares declined over 4% in extended trade with investors discouraged by the miss on iPhone sales and lack of guidance, as well as a 29% Y/Y drop in its Chinese revenue which pressured its supply Chain in Asia and Twitter slumped nearly 18% after hours on slower user growth. ASX 200 (-0.6%) and Nikkei 225 (-1.5%) were weaker with industrials and tech frontrunning the declines in Australia although losses in the index were briefly pared by financials as AMP shares surged over 20% following a takeover approach by Ares Management, while the mood in Tokyo was clouded by currency effects and soft inflation data but with Panasonic shares a notable gainer on reports it is working with Tesla to build a new battery cell production line at the Gigafactory. Elsewhere, the Hang Seng (-2.0%) and Shanghai Comp. (-1.5%) remained cautious amid a plethora of large-cap earnings and with participants mulling over the initial details of the 5-year plan which seeks to build the nation into a technological powerhouse and emphasized quality growth over speed but refrained from specifying a targeted pace of growth. Finally, 10yr JGBs were lower and fell below support near 152.00 on spillover selling from T-notes as Wall Street initially nursed losses and following an uninspiring 7yr auction stateside, although the downside for JGBs was cushioned with the BoJ in the market for nearly JPY 1.3tln of JGBs with up to 10yr maturities.

PBoC injected CNY 100bln via 7-day reverse repos at rate of 2.20% for a CNY 190bln net weekly injection. (Newswires) PBoC set USD/CNY mid-point at 6.7232 vs. Exp. 6.7207 (Prev. 6.7260)

Chinese Science Minister Wang said tech innovation is important for dual circulation strategy and that China tech self-sufficiency does not mean it is closing its doors. There were also comments from China Communist Party senior official Han that dual circulation is a proactive measure and long-term strategy, while he added China will expand market access for foreign investors and expects China's foreign trade and foreign investments to increase. (Newswires)

Japanese Industrial Production (Sep P) M/M 4.0% vs. Exp. 3.2% (Prev. 1.0%). (Newswires) Japanese Industrial Production (Sep P) Y/Y -9.0% vs. Exp. -9.8% (Prev. -13.8%)

Tokyo CPI (Oct) Y/Y -0.3% vs. Exp. -0.1% (Prev. 0.2%). (Newswires) Tokyo CPI Ex. Fresh Food (Oct) Y/Y -0.5% vs. Exp. -0.5% (Prev. -0.2%) Tokyo CPI Ex. Fresh Food & Energy (Oct) Y/Y -0.2% vs. Exp. -0.2% (Prev. 0.0%)

Agricultural Bank of China (1288 HK) Q3 net profit CNY 56.5bln, +4.6%. 9-month net profit CNY 165.4bln.

Bank of China (3988 HK) 9M net profit CNY 145.71bln, Q3 net profit CNY 44.79bln, CET1 adequacy ratio 10.87% vs. prev. 11.51%

ICBC (1398 HK) 9-month net income CNY 228.7bln, Q3 net income CNY 80.0bln

US

US Treasury Secretary Mnuchin said he spoke with House Speaker Pelosi nearly every day for the last month and a half, while he added that the letter he received from Pelosi was a political stunt. (Fox News)

Elizabeth Warren is reportedly set to request to become Joe Biden’s Treasury Secretary in the event that the former VP wins the upcoming election. Should this request not be granted, Warren would look to push for a seat on the Senate Finance Committee, according to sources. (Politico)

UK/EU

EU GDP Flash Prelim QQ (Q3) 12.7% vs. Exp. 9.4% (Prev. -11.8%); YY (Q3) -4.3% vs. Exp. -7.0% (Prev. -14.7%, Rev. -14.8%)

-        EU HICP Flash YY (Oct) -0.3% vs. Exp. -0.3% (Prev. -0.3%)

-        HICP-X F&E Flash YY (Oct) 0.4% vs. Exp. 0.4% (Prev. 0.4%)

-        HICP-X F, E, A & T Flash YY (Oct) 0.2% vs. Exp. 0.2% (Prev. 0.2%)

UK Lloyds Business Barometer (Oct) -18 (Prev. -11). (Newswires)

German Deputy Finance Minister says he is deeply concerned by the lack of progress in Brexit trade talks. (Newswires)

ECB's Mersch says it is the ECB's firm intention to pay a role in the second wave of the pandemic; fiscal policy would be the most appropriate response during a second wave of COVID. (Newswires)

ECB's Visco says the European deflation risk is lower than 6-months ago but must not be ignored. (Newswires)

GEOPOLITICAL

US imposed Iran-related sanctions on individuals and entities, according to the US Treasury website. (Newswires)

EQUITIES

European equities (Eurostoxx 50 -0.1%) have trimmed opening losses throughout the session despite underpeformance of Stateside peers. After a mixed close yesterday, equities in the region initially succumbed to some of the heavy selling pressure seen after the Wall St. close in the wake of earnings from US tech mega-caps. Despite the likes of Apple, Alphabet, Amazon, Facebook and Twitter recording beats on top and bottom lines, earnings (ex-Alphabet; up 5.6% pre-market) were received poorly with Apple shares currently lower by 4.5% in pre-market trade following a miss on iPhone sales and lack of guidance, as well as a 29% Y/Y drop in its Chinese revenue. Social media names Facebook (-2.4%) and Twitter (-17.5%) are seen lower ahead of the cash open, whilst e-commerce giant Amazon (-2.1%) are also lagging with some citing soft operating income guidance for December. In Europe, given the gravitational pull of the aforementioned large-caps, stocks across the continent commenced the session on the backfoot before staging a mild recovery with little in the way of clear fundamentals behind the move; as context the Eurostoxx 50 is lower by 6.4% on the week. Sectoral performance is somewhat mixed with oil & gas names the clear outperformer in the wake of earnings from Total (+2.3%) who reported a heavy beat on Q3 net income and maintained its dividend despite the likes of BP, Shell and Eni trimming theirs in 2020. Elsewhere, banking names are also performing well this morning following Q3 results from Natwest Group (+5.6%) which saw the Co. beat expectations for quarterly pre-tax profits and suggest that FY impairments are seen at the lower end of the range. IAG (+2.6%) have lent some support to the travel & leisure sector despite reporting a wider than expected loss for Q3 operating income with the CEO noting that his top priority will be reducing the Co.’s cost base. To the downside, underperformance has been observed in personal & household goods and food & beverage names. Health care names are also softer on the session following earnings from Novo Nordisk (-1.5%) with the insulin producer missing on expectations for EBIT and net profits.

Link to European equity/earnings updates & additional post 06:50GMT updates

Alphabet Inc Class C (GOOG) (Communication Services/Interactive Media & Services) EPS 16.40 (exp. 11.29), Revenue 46.2bln (exp. 42.9bln) Advertising revenue: 37.10bln (exp. 34.51bln) Google segment: 46.02bln (exp. 42.48bln) Google cloud segment: 3.44bln (exp. 3.31bln). Q3 growth led by increase in advertiser spend.

Amazon.com Inc. (AMZN) (Consumer Discretionary/Internet & Direct Marketing Retail) Q3 20 (USD): EPS 12.37 (exp. 7.41); Revenue 96.1bln (exp. 92.7bln). REVENUE BREAKDOWN: AWS: 11.6bln (exp. 11.58bln). Online stores:  48.35bln (exp. 47.28bln). Other: 5.4bln (exp. 4.91bln). Physical stores: 3.788bln (exp. 3.96bln). Subscriptions: 6.57bln (exp. 6.27bln). Continues to see strong Prime member engagement, and it also expects Q3 trends to continue into Q4, although it expects a lot of uncertainty, thus providing a wide range of revenue guidance. Q4 EPS view 112-121bln (exp. 112bln); assumes USD 4bln worth of COVID related costs.

Apple Inc. (AAPL) (Information Technology/Technology Hardware, Storage & Peripherals) Q3 20 (USD): EPS 0.73 (exp. 0.70); Revenue 64.70bln (exp. 63.7bln); maintains dividend of USD 0.205/shr iPhone: 26.44bln (exp. 27.93bln) iPad: 6.8bln (exp. 6.12bln) Mac: 9.03bln (exp. 7.93bln) Other: 7.88bln (exp. 7.4bln) Services: 14.55bln (exp. 14.08). Response to new products is tremendously positive. Greater China revenue USD 7.9bln (prev. USD 11.1bln Y/Y, prev. USD 9.33bln Q/Q), although it was better than Apple’s expectation. Maintains dividend of USD 0.205/shr. AAPL states its results were ahead of its expectations. Note, AAPL rallied into the closing bell yesterday ahead of its release.

Facebook, Inc. (FB) (Communication Services/Interactive Media & Services) Q3 20 (USD): Adj. EPS 2.71 (exp. 1.91); Revenue 21.5bln (exp. 19.82bln); Continue to face a significant amount of uncertainty for 2021. DAUs:1.82bln (exp. 1.79bln). MAUs: 2.74bln (exp. 2.7bln).

Twitter, Inc. (TWTR) (Communication Services/Interactive Media & Services) Adj. EPS 0.19 (exp. 0.06/-0.10 reported); Revenue 936mln (exp. 777mln). MDAUs: 187mln (exp. 195.2mln, prev. 145mln Y/Y), US MDAU’s 36mln (prev. 30mln Y/Y).

FX

USD – The Dollar remains relatively firm and resilient given a loss of safe-haven status or less demand amidst a fragile recovery in risk sentiment, month end portfolio rebalancing and positioning ahead of next week’s US Presidential Election. However, the index is back below 94.000 and Thursday’s 94.105 high within a 93.983-762 range as several major counterparts claw back some lost ground before another raft of data, the Chicago PMI and final Michigan sentiment.

JPY/AUD – Leading the aforementioned G10 recovery in spite of somewhat mixed Japanese CPI, unemployment and ip updates, the Yen is back above 104.50 and a key Fib at the half round number alongside hefty option expiry interest (2.2 bn). On the flip-side, 1.4 bn expiries at the 104.00 strike will act as a barrier and support for Usd/Jpy after the pair got to within 2-3 pips of the level yesterday, and conversely the Aussie appears to be drawing comfort from the fact that it survived an equally close shave with 0.7000 to probe 0.7050 with assistance from ANZ’s CEO arguing against an RBA ease next week on the grounds it would flood the financial system with more liquidity, impair bank profitability and only boost the economy and jobs marginally.

GBP – Also firmer vs the Buck after losing 1.2900+ status on Wednesday and maintaining momentum against the Euro close to 0.9000 in wake of the ECB, though wary of ongoing Brexit uncertainty and end of month Eur/Gbp cross flows that can deviate from RHS to LHS quite sporadically.

NZD/EUR/CAD/CHF – All narrowly mixed vs the Greenback, as the Kiwi regains hold of the 0.6600 handle in wake of another upbeat sentiment survey (ANZ consumer confidence up to 108.7 in October from 100.0 previously), and the Euro pares some post-ECB losses after basing at 1.1650. Note, this coincided with the 100 DMA, which is now 5 pips firmer and the 2 chart points also align with 1.5 bn option expiries for today’s NY cut. Perhaps predictably, market contacts tout stops on a break of 1.1650 that would expose a virtual double bottom from late September (1.1615-12). Elsewhere, the Loonie is deriving a degree of comfort from stability in oil prices and the generally less risk averse tone to retest 1.3300 from 1.3390 or so, but the Franc is still lagging below 0.9150 and hovering near 1.0700 against the Euro.

EM – The Yuan has bounced further from recent lows despite a relatively soft PBoC midpoint fix, but the Lira is back on the rack at new all time lows amidst ongoing investor angst over Turkey’s strained relations with international peers.

Notable FX Expiries, NY Cut:

-        EUR/USD: 1.1600 (472M), 1.1670 (400M), 1.1690-1.1700 (1BLN), 1.1750-55 (1.5BLN), 1.1770 (330M), 1.1800 (2.2BLN), 1.1850 (1.7BLN)

-        USD/JPY: 104.00 (1.4BLN), 104.50 (2.2BLN), 104.60 (405M), 104.80-85 (1.8BLN), 104.95-105.00 (1.2BLN)

FIXED INCOME

After several bullish sessions and conviction gleaned from a desire to flee riskier climes and assets like stocks, bonds look somewhat bereft of purpose approaching the end of the week and month. However, Bunds are back up near best levels having retreated to retest Wednesday and Thursday lows at 175.93 and Gilts have actually carved out a fresh Liffe peak at 136.08 to cut losses to 9 ticks from 35 ticks at worst. A fade in EU equities through parity maybe a supportive factor, but in truth the inverse correlation has been waning, so it seems more like late position and balance sheet tweaking before October draws to a close. Meanwhile, US Treasuries are holding steady to slightly firmer with a faint flattening bias ahead of the final data and surveys for the month and after absorbing this week’s supply.

COMMODITIES

WTI and brent are modestly firmer this morning in a pull-back from some of the overnight losses after sentiment took a hit on the earnings-spurred downside in US equities last night. Following this, the crude complex has continued to lift off lows throughout the session alongside sentiment in general; WTI and Brent are currently firmer by around USD 0.30/bbl. Turning to OPEC where the Iraq oil minister pushed back on reports that the country and others are considering a rollover of existing OPEC+ output cuts into 2021 given developments on both the demand & supply side. While the remark is interesting there is still over a month until the next OPEC+ gathering and as such a pushback on such commentary at this stage is perhaps not too surprising. Elsewhere, the BSEE report of 43-companies had just shy of 85% of oil shut-in for the Gulf given Storm Zeta; its worth noting the storm is continuing to dissipate and as such production should be restored to the Gulf over the next few days – assuming no damage occurred. Moving to metals, spot gold is modestly firmer this morning as the USD has dipped as sentiment sees a moderate pick up from a European perspective. Separately, mining updates saw Glencore confirm their FY production guidance with the exception of coal given strike action at the Cerrjeon site; additionally, their YTD copper production is -8% vs. the prior period.

Iraq Oil Minister will support any decision taken by OPEC+ regarding output policy alterations, denies reports that Iraq and other countries are discussing rolling over existing cuts into 2021. (Newswires)