• European bourses & US futures are in the red with the breakdown heavily influenced by a busy corporate docket
• Microsoft +3.6% & Google -6.8% in the pre-market, ahead of heavyweights include Meta & Boeing
• DXY eclipses Monday’s best to the modest detriment of peers, AUD gives up post-CPI gains & JPY continues to test 150.0
• Core fixed benchmarks lose initial upward momentum despite strong auctions, modest pressure emanating from above-forecast German Ifo
• A contained and limited session for the commodity space as the pace of geopolitical updates slows somewhat
• Looking ahead, highlights include US New Home Sales, BoC Policy Announcement, Fed's Powell, ECB's Lagarde, BoC's Macklem & Rogers, and Supply from the US. Earnings: Meta, Thermo Fisher, T-Mobile, IBM, ADP, Boeing.

EUROPEAN TRADE

EQUITIES

• European bourses reside in the red after a particularly busy morning of corporate updates, Euro Stoxx 50 -0.4%, and with broader macro drivers somewhat lacking thus far.
• Sectors are being dictated by earnings with Food, Beverage & Tobacco outperforming post-Heineken, Banking torn between Deutsche Bank and Lloyds while Kering weighs on Consumer names. Elsewhere, ASM International is among the best performers in the Stoxx 600 post-results.
• On the data front, better-than-expected German Ifo numbers sparked fleeting upside but have been unable to offset the pressure and general tone after the region's Flash PMIs.
• Stateside, futures are also in the red with the ES -0.4% & NQ -0.6% given the above and following after-market earnings from Microsoft (+3.6% pre-market) and Google (-6.8% pre-market), with the latter weighing on equity performance. Action which was exacerbated just after the European cash open following a bout of upward momentum in global yields.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
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FX

• Buck rotates 360+ degrees as DXY breaches Monday peak and eclipses best from last Friday between 106.130-500 parameters.
• Aussie pops post-hot inflation metrics, but AUD/USD hits resistance bang on 0.6400 before fading.
• Euro briefly boosted by above forecast Ifo survey findings, but EUR/USD tops out just above 1.0600.
• Franc retreats through 0.8950 as Swiss investor confidence deteriorates markedly.
• Sterling stares at 1.2100 vs resurgent Dollar and Yen faces another test of 150.00, Loonie straddles 1.3750 ahead of BoC.
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• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Bonds lose early bullish momentum irrespective of strong-to-solid demand for UK, German and Italian issuance.
• Bunds retreat from 129.02 to 128.32, Gilts pare gains within a 93.08-92.63 range and T-note reverses to 106-05 from 106-18 ahead of US housing data, 5-year auction and Fed Chair Powell.
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COMMODITIES

• A limited session for the complex; the mentioned Ifo release sparked only fleeting action with the crude benchmarks in relative proximity to Tuesday's troughs and almost entirely disregarding the Energy Inventory data overnight.
• Currently, WTI and Brent Dec'23 contracts are towards the mid-point of respective USD 83.16-84.01/bbl and USD 87.55-88.50/bbl parameters.
• Spot gold is flat on the session as we await fresh macro drivers in a schedule dominated by earnings while base metals attempt to inch into the green but given the lack of drivers and modest USD bid have struggled to make any real headway.
• US Energy Inventory Data (bbls): Crude -2.7mln (exp. +0.2mln), Gasoline -4.2mln (exp. -0.9mln), Distillate -2.3mln (exp. -1.2mln), Cushing +0.5mln.
• China state planner said China is to cap crude oil processing capacity at 1bln metric tons by 2025. Refineries of 10mln metric ton capacity to account for 55% of capacity. Promote upgrading and optimisation of refineries, and accelerate the elimination of small and outdated plants, according to Reuters.
• Fitch says Chinese aluminium supply is likely to tighten next year or so, which could potentially drive up average selling prices and producer profit margins.
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EUROPEAN DATA

• German Ifo Business Climate New (Oct) 86.9 vs. Exp. 85.9 (Prev. 85.7, Rev. 85.8); See slight growth within Germany in Q4. Services are stabilising the economy. ECB could have room to cut interest rates in H2-2024. Little reason for any more ECB hikes.
• Current Conditions New (Oct) 89.2 vs. Exp. 88.5 (Prev. 88.7); Expectations New (Oct) 84.7 vs. Exp. 83.3 (Prev. 82.9, Rev. 83.1)

NOTABLE HEADLINES

• Alphabet Inc (GOOGL) - Q3 2023 (USD): EPS 1.55 (exp. 1.45), Revenue 76.69bln (exp. 75.9bln), Revenue ex-TAC 64.05bln (exp. 63.04bln). Operating income 21.34bln (exp. 21.44bln). Google Services operating income 23.94bln (exp. 22.89bln). Google Cloud operating income 266mln (exp. 433.6mln). Operating margin 28% (exp. 28.1%). Click here for the full earnings. GUIDANCE: Q3 cloud growth reflects customer optimization efforts; expects Q4 headwinds in hardware segment. CEO says customers are 'starting to optimize spend' on cloud computing. CFO feels "good about where we're sitting" with cloud computing growth - Shares fell 5.9% after-market; -6.8% in the pre-market
• Microsoft Corp (MSFT) - Q1 2024 (USD): EPS 2.99 (exp. 2.65), Revenue 56.5bln (exp. 54.5bln). Cloud Revenue 31.8bln (exp. 31.19bln). Productivity Revenue 18.59bln (exp. 18.29bln). Returned USD 9.1bln to holder. Dynamics products and cloud services revenue increased by 22%. Click here for the full earnings. GUIDANCE: Q2 Productivity and Business 188.8-19.1bln (exp. 18.83bln). Intelligent Cloud 25.1-25.4bln (exp. 24.94bln). More Personal Computing 16.5-16.9bln (exp. 14.52bln). Bookings growth guided about flat Y/Y. Operating Expenses 15.5-15.6bln (exp. 15.06bln). COGS 19.4-19.6bln (exp. 19.09bln) - Shares rose 3.9% after-market; +3.6% in the pre-market
• Mike Johnson has won the latest GOP nomination for House Speaker, according to Bloomberg.

GEOPOLITICS

ISRAEL-HAMAS

• Israeli occupation forces stormed the Burqin town, south of Jenin in the West Bank, according to Al Jazeera. Two explosions are heard on the outskirts of Jenin refugee camp in the West Bank, according to Al Jazeera. Israeli army storms the eastern area of Nablus city in the West Bank, according to Sky News Arabia citing Palestinian media
• The Arab draft resolution calls for an immediate ceasefire in Gaza and the cancellation of the order issued by Israel to civilians to evacuate the northern Gaza Strip and move towards the south, according to Sky News Arabia.
• Kuwait's representative to the Security Council said a Palestinian state must be established on the 1967 borders, according to Sky News Arabia.
• Lebanon's representative to the Security Council said a Palestinian state must be established on the 1967 borders with East Jerusalem as its capital, according to Sky News Arabia.
• S&P affirmed Israel at "AA-"; downgraded outlook to negative on geopolitical risks.

OTHER

• US is reportedly using Israel’s delay in launching a ground offensive in Gaza to send defensive systems into the region amid growing fears that Iran and its proxies will escalate attacks once the ground offensive begins, according to officials cited by the FT.
• Two dozen American military personnel were wounded last week in drone attacks at US bases in Iraq and Syria, according to NBC News.
• Chinese President Xi said China is willing to manage differences with the US and work together to respond to global challenges, via state media, according to Reuters.

CRYPTO

• Another session of gains for BTC which is managing to hold onto the lions share of Tuesday's pronounced upside which saw Bitcoin briefly eclipse USD 35k. As it stands, BTC is holding just above the USD 34k mark but has been below the figure at times during both the APAC and European sessions.
• DTCC said BlackRock iShares Bitcoin Trust ETF added to the eligibility file in August 2023; appearing on the list is not indicative of the outcome for any outstanding regulatory or other approval, according to Reuters

APAC TRADE

• APAC stocks traded mixed following a firmer lead from Wall Street as eyes turned to earnings from heavyweights Microsoft and Alphabet. Shares of the former rose 3.9% and the latter tumbled 5.9% with cloud growth in focus.
• ASX 200 slipped into the red after Aussie CPI topped expectations across the board, which led to hawkish revisions to some analysts' RBA calls. Real Estate led sectoral losses, but the index was cushioned by outperformance in its Mining sector.
• Nikkei 225 was supported by recent JPY weakening as export-related sectors outperformed with some potential tailwinds after Bloomberg sources yesterday suggested that the BoJ saw little need to change its "will not hesitate to take additional monetary easing measures" forward guidance.
• Hang Seng and Shanghai Comp surged at the open with sentiment in the region boosted by reports that Chinese President Xi made an unprecedented visit to the PBoC in a "sign of focus on the economy." Hong Kong markets outperformed as large-caps posted gains between 4-6%, and tech also felt some tailwinds from Microsoft's earnings and guidance.

NOTABLE ASIA-PAC HEADLINES

• Hong Kong is to cut the home purchase tax by half to 7.5%, according to local press Sing Tao.
• Hong Kong Leader Lee said Hong Kong is to adjust property cooling measures to revive the city's real estate market; scrap stamp duty for selling second homes after two years; to reduce buyer's stamp duty to 7.5% from 15%. Hong Kong Leader Lee said Hong Kong is to reduce the stamp duty of stock transactions to 0.1% from 0.13%
• Chinese Vice Finance Minister said the usage of new sovereign bonds can drive up domestic demand actively and further consolidate economic recovery. Government debt level still within reasonable range despite a modest rise in budget deficit ratio this year. China will watch the macro economy and bond market closely to ensure smooth bond issuance and avoid leaving the funds idle.
• PBoC set USD/CNY mid-point at 7.1785 vs exp. 7.3213 (prev. 7.1786)
• PBoC injected CNY 500bln via 7-day reverse repos with the rate at 1.80% for a CNY 395bln net daily injection.
• ANZ Bank economists have changed their call on RBA rates and now see a 25bps hike to 4.35% in November, according to Reuters.
• Australian Treasurer Chalmers said while inflation in Australia is moderating overall, it is proving to be more persistent, according to Reuters.
• Country Garden (2007 HK) default on a USD bond has been declared for the first time, via Bloomberg.
• China's cabinet has restricted 12 high risk regions from taking on new debt to finance certain infrastructure projects, according to Reuters sources. Earlier in the week, China said it is to ensure outstanding local govt debt does not exceed approved quotas, via State Media.

DATA RECAP

• Weighted Australian CPI YY 5.6% vs Exp. 5.4% (Prev. 5.2%)
  • Australian CPI YY (Q3) 5.4% vs. Exp. 5.3% (Prev. 6.0%); QQ (Q3) 1.2% vs. Exp. 1.1% (Prev. 0.8%)
  • Australian RBA Weighted Median CPI YY (Q3) 5.2% vs. Exp. 5.0%
  • Australian RBA Trimmed Mean CPI YY (Q3) 5.2% vs. Exp. 5.0%
  • Australian RBA Weighted Median CPI QQ (Q3) 1.3% vs. Exp. 1.0%
  • Australian RBA Trimmed Mean CPI QQ (Q3) 1.2% vs. Exp. 1.1%