Newsquawk

US Market Open: Downside bias across stocks while crypto continues feeling the pain

09 Nov 2022, 11:25 by Newsquawk Desk

Major bourses in Europe hold a downside bias after seeing some choppiness at the cash open and following a mixed APAC handover; US futures are also softer
US Midterm Elections are mostly as expected so far with GOP's leading the House while the Senate is seen as a toss-up; there was very little market reaction in response to the mid-terms overnight
DXY attempts to nurse some recent losses and trades on either side of 110.00 whilst the GBP and NZD underperform
Crypto markets remain on the backfoot; Bitcoin briefly dipped under yesterday's low and Ethereum fell under USD 1,200
Looking ahead, highlights include US Midterm Election Results, Speeches from Fed's Barkin, ECB's Elderson, BoE's Haskel, Supply from US

9th November 2022

US MIDTERM ELECTION

In the House, official results have Republicans on 196 and Democrats on 168. Projections from the New York Times (seats either already won by a party or projected to win) put the Republicans on 219 and Democrats on 207 with 9 seats viewed as "tossups".
In the Senate, official results have Republicans on 47 and Democrats on 48. Three key battleground states which are yet to be called are Arizona, Nevada and Georgia. The Georgia seat could end up having to be decided via an election run-off which would be held on December 6th. As such, the outcome of the election might not be known for weeks.
Click here for a full Newsquawk update

Major bourses hold a downside bias after seeing some choppiness at the cash open and following a somewhat mixed APAC handover.
Sectors are all in the red with a clear defensive bias as Telecoms, Utilities, Healthcare, Food & Beverages post the shallowest losses, whilst Tech, Travel & Leisure, Real Estate and Retail reside at the other end of the spectrum.
US equity futures traded sideways on either side of breakeven overnight and in early European hours but have since drifted under the overnight lows.
Click here for more detail.

DXY attempted to stop the rot and nurse some losses awaiting the remaining and potentially game-changing Midterm Election results, with the index now on either side of 110.00.
The NZD and GBP underperform and more ground than other majors as the Buck bounced, with nothing obvious in terms of negative NZ or UK factors.
Traditional havens JPY and CHF are off best levels, but retained a safety premium as the rout in crypto currencies raged on and the ripples reverberated across to stocks.
Click here for more detail.

US Treasuries are braced for the long bond sale that wraps up this week’s rather mixed Quarterly Refunding.
Gilts remain in the green having digested an average Green offering.
Bunds saw a lack of positive reaction despite a very well received 2032 German auction.
Click here for more detail.

WTI and Brent futures are softer intraday as the Dollar claws back some recently lost ground and sentiment remain tilted to the downside, whilst China’s COVID situation remains an overhang for the complex.
US Energy Inventory Data (bbls): Crude +5.6mln (exp. +1.4mln), Cushing -1.8mln, Gasoline +2.6mln (exp. -1.1mln), and Distillate -1.8mln (exp. -0.9mln).
IEA's Birol said OPEC+ might need to rethink its output cut decision, according to Bloomberg
Spot gold swayed from gains to losses after testing resistance at its 100 DMA (1,715/oz) in early European hours, before a turn in risk sentiment spurred the Dollar and hit the yellow metal
Base metals are pressured by the downbeat risk tone and the firmer Dollar, but 3M LME copper holds onto a USD 8,000/t handle after testing USD 8,100/t to the upside overnight.
Click here for more detail.

NOTABLE EUROPEAN HEADLINES

UK PM Sunak could raise the top rate of income tax, according to The Telegraph. Options being discussed include raising the 45% top rate, or lowering the GBP 150k annual income threshold at which it kicks in.
UK Chancellor Hunt is set to scrap former PM Truss' plan for investment zones, according to FT.
EU is mulling Eurobonds for Ukraine fund, Politico reported - will propose a new EU instrument to finance EUR 18bln.

NOTABLE US HEADLINE

Fed's Williams (voter) notes that stable long-term inflation expectations are good news, and is surprised by how much of the public expects deflation, according to Reuters.
Elon Musk reports the sale of Tesla (TSLA) shares in a filing; sold at least 19.5mln shares worth USD 3.5bln since Friday. TSLA +0.8% pre-market

CRYPTO

Bitcoin briefly dipped under yesterday's low of USD 17,500 before finding support at USD 17,250 while Ethereum fell under USD 1,200.

North Korea fired a missile, according to South Korean military; could be a ballistic missile, according to Japanese Coast Guard; projectile has fallen outside of Japan's EEZ.
German cabinet has agreed to block the prospective Chinese takeover of Elmos chip factory and ERS electronics, according to government sources cited by Reuters.

APAC stocks traded cautiously and US equity futures were indecisive as attention centred on the trickling results from the US Midterm Elections where a red wave has so far not yet materialised although Republicans are in a strong position to take control of the House, while the Senate race is still widely viewed as a toss-up.
ASX 200 was led higher by strength in the mining-related sectors although upside was capped as financials are subdued following results from National Australia Bank which posted an increase in FY profit but warned of a significant slowdown in lending growth for the current fiscal year.
Nikkei 225 faded its initial gains with price action lacklustre amid a slew of earnings and despite Japan’s Cabinet approving a JPY 29.1tln extra budget to fund the stimulus package.
Hang Seng and Shanghai Comp swung between gains and losses with early strength in property names after China’s state planner asked large banks to step up lending for manufacturing infrastructure and developers, with China to provide initial support of around CNY 250bln in bond financing to private firms, although COVID-related headwinds persisted following a further increase in China’s daily infections and participants also reflected on the mixed-to-soft inflation data.

NOTABLE ASIA-PAC HEADLINES

China's Guangzhou reportedly locked down a second district due to coronavirus. However, it was separately reported that China lifted the lockdown in the area around Foxconn's Apple (AAPL) iPhone plant as planned, according to Bloomberg.
hina's Guangzhou locks down another district amid COVID, according to Bloomberg.
China reported 1,346 (prev. 890) new coronavirus cases in the mainland for November 8th, 1,294 (prev. 843) new local cases and 6,989 (prev. 6,801) new asymptomatic cases, according to Reuters.
US President Biden will highlight a commitment to rules-based international order in the South China Sea during the ASEAN summit and will talk about the need for peace and stability throughout the Indo-Pacific region and across the Taiwan Strait, according to a senior administration official cited by Reuters.
RBA's Bullock reiterated that further rate hikes will be needed. Wage growth is a bit stronger than thought three months ago. Good reason to think approaching peak of the inflation cycle, via Reuters.

DATA RECAP