• APAC stocks were positive with the region inspired by gains in global counterparts (SPX +2.66%).
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +1.2% after the cash market closed with gains of 1.8% yesterday.
• BoE is reportedly expected to further delay quantitative tightening until gilt markets calm, according to FT.
• DXY is softer and on a 111 handle, GBP is supported post-QT delay expectations, NZD bolstered by strong CPI.
• Looking ahead, highlights include German ZEW, US Industrial Production & Capacity Utilisation, Speeches from Fed's Bostic, Kashkari & ECB's Schnabel, Supply from UK & Germany, Earnings from Goldman Sachs, JNJ, LMT, Netflix, United Airlines, Interactive Brokers, Roche.

US TRADE

• US stocks finished with firm gains amid a UK-catalysed risk rally after new Chancellor Hunt announced a reversal of most of the measures in the 'mini-budget' which underpinned the Pound and broader risk appetite. Earnings also provided a tailwind with US banks supported after Bank of America was the latest to report strong net interest income amid the higher rate environment, while it mentioned a slowing consumer but caveated that spending was still strong.
• SPX +2.66% at 3,678, NDX +3.46% at 11,062, DJIA +1.87% at 30,188, RUT +3.17% at 1,736.
• Click here for a detailed summary.

APAC TRADE

EQUITIES

• APAC stocks were positive with the region inspired by gains in global counterparts following the UK Chancellor’s reversal of most of the measures of the 'mini-Budget' and with a report later suggesting a delay of QT by the BoE.
• ASX 200 was led by strength in tech and with the top-weighted financials sector also notching firm gains, while commodity-related stocks were somewhat varied with Rio Tinto choppy after a mixed quarterly activity report.
• Nikkei 225 reclaimed the 27,000 level to the upside, but was off highs with officials continuing to pledge to take action to address excess FX moves.
• Hang Seng and Shanghai Comp. gained although the mainland lagged amid COVID woes after Nanjing halted certain indoor venues due to rising cases, while the postponement of key Chinese data releases including Q3 GDP has led to some speculation that the data could be disappointing, although it was also suggested that the delay could be so that officials can concentrate on the Chinese Communist Party Congress.
• US equity futures were firmer (e-mini S&P +1.6%) overnight and sustained the momentum from the prior day's rally.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +1.2% after the cash market closed with gains of 1.8% yesterday.

FX

• DXY attempted to nurse some of its recent losses but was thwarted amid the constructive risk tone and as its transatlantic peers benefitted from a report that the BoE is likely to bow to investor pressure to delay QT.
• EUR/USD extended on the prior day's advances amid the softer dollar and recent decline in energy prices.
• GBP/USD tested the 1.1400 level to the upside after yesterday's outperformance which was spurred by the new UK Chancellor's reversal of nearly all of the tax measures announced by his predecessor Kwarteng in the mini-Budget.
• USD/JPY briefly climbed above 149.00 to print its highest level in 32 years which spurred a repeat of the pledges to take action to address excess FX moves.
• Antipodeans strengthened alongside the risk appetite with NZD/USD also supported after firmer-than-expected New Zealand CPI data which prompted several hawkish calls by commercial banks and saw the swaps market price in a more than 80% chance of a 75bps hike next month.

FIXED INCOME

• 10yr UST futures were initially rangebound after yesterday’s choppy performance whereby the buoyant risk tone unwound an early duration bid on the UK fiscal U-turn, while there was late support on a report that the BoE is expected to delay quantitative tightening until the gilt market calms.
• Bund futures were contained at the 137.00 level for most of the session but were later lifted on the BoE report.
• 10yr JGB futures lacked firm direction with the 10yr yield stuck at the upper limit of the BoJ’s target and despite mostly improved results from the 20yr auction.

COMMODITIES

• Crude eventually gained alongside the risk appetite but with upside capped by China COVID woes and reports of a potential SPR release announcement by the Biden administration of between 10mln-15mln bbls.
• White House is reportedly planning an oil reserve release announcement this week with a release of another 10mln-15mln bbls in an effort to balance markets and keep prices from climbing, according to Bloomberg. Note, this would come from part of a previously announced 180mln bbl sale announced earlier in the year
• UAE supports Saudi Foreign Ministry's statement regarding the OPEC+ decision and fully stands with Saudi Arabia in its efforts to support energy stability and security, according to the state news agency cited by Reuters.
• Spot gold marginally benefitted in late trade as the dollar eventually softened.
• Copper notched slight gains alongside the constructive risk tone but with upside limited amid China lockdown woes and with the delay of key Chinese data releases spurring some speculation of a weak economy.

CRYPTO

• Bitcoin eked slight gains with prices kept afloat after support held at the 19,500 level.
• EU financial services chief McGuiness called on the US to create new crypto rules and said any regulation imposed on the industry would need to be global for it to work, according to FT.

GEOPOLITICS

RUSSIA-UKRAINE

• US Commerce Department issued a temporary denial order against Ural Airlines for operating in apparent violation of US export controls on Russia, according to Reuters.
• UN spokesperson said all discussions on the Black Sea grain initiative were positive and constructive, according to Reuters.

OTHER

• Japanese Chief Cabinet Secretary Matsuno said Japan is to impose additional sanctions against North Korea, according to Reuters.
• Officials revealed that China recruited dozens of former British military pilots to teach Chinese armed forces how to defeat western warplanes and helicopters in a “threat to UK interests”, according to Sky News's Deborah Haynes.

ASIA

NOTABLE APAC HEADLINES

• Chinese President Xi is preparing to name loyalists to the top positions in the Communist Party hierarchy in a move that would strengthen his hand as he confronts mounting challenges at home and abroad, according to WSJ sources.
• China's Nanjing halted certain indoor venues including bars, KTVs and gyms, while it also halted dine-in services due to an increase in coronavirus cases.
• RBA Minutes from the October 4th Meeting stated the decision to raise rates by only 25bps was finely balanced with the smaller move warranted by the scale of hikes already delivered and lags in policy. RBA added that the uncertain outlook argued for slower hikes for a time but noted further increases in rates are likely over the period ahead and that rates are not especially high, while the board emphasised the importance of keeping inflation expectations anchored and RBA said monthly CPI data confirmed broad-based pick-up in inflation, rents and utilities are expected to increase.
• RBA Deputy Governor Bullock said the board expects to increase interest rates further over the coming months with the pace and timing to be determined by data, while she added that as the board meets more frequently than most peers, it can achieve a similar tightening with smaller individual rate increases.

DATA RECAP

• New Zealand CPI QQ (Q3) 2.2% vs. Exp. 1.6% (Prev. 1.7%)
• New Zealand CPI YY (Q3) 7.2% vs. Exp. 6.6% (Prev. 7.3%)
• RBNZ Sectoral Factor Model Inflation Index (Q3) 5.4% (Prev. 4.8%)

EU/UK

NOTABLE EU/UK HEADLINES

• BoE is reportedly expected to further delay quantitative tightening until gilt markets calm, according to FT.
• UK PM Truss said she wants to accept responsibility and apologise for the mistakes made, while she added that she will lead the Tories into the next general election and is sticking around because she was elected to deliver for the country. PM Truss also stated the most vulnerable will be protected into next winter regarding household energy bills and that they are looking at exactly how they can do that, according to a BBC interview.
• UK Chancellor Hunt said they should be careful not to tax companies in a way that drives away investment, but nothing is off the table, according to Reuters.
• ECB's Villeroy said the UK crisis shows the risk of a vicious loop and that the pensions turmoil underscored the need for non-banks to build liquidity buffers, according to FT.
• ECB's Nagel said ECB must withdraw support quickly and not stop too early, while he added that borrowing costs will have to shift into restrictive territory if required, according to Bloomberg.
• Italy's Meloni said she had a very cordial meeting with Berlusconi and the two are working together to quickly form a cohesive government, according to Reuters.