• APAC stocks ultimately traded mixed but with the major indices mostly in the red as geopolitics continued to dominate headlines ahead of month-end and this week’s slew of upcoming risk events.
• DXY was rangebound, EUR/USD traded steadily, 10-year UST futures were contained, and Bund futures remained firmer after last week’s spoils and recent ECB commentary regarding no more hikes.
• Crude futures reversed most of Friday's gain, while reports also noted Saudi could refrain from hiking prices to clients in Asia. Spot gold and copper traded sideways.
• US Secretary of State Blinken met with Chinese Foreign Minister Wang Yi and agreed to work towards a Biden-Xi meeting in November in San Francisco.
• Israeli PM Netanyahu said the ongoing ground operation in Gaza is the second stage of the war and said the war inside the Gaza Strip will be difficult and long.
• Looking ahead, highlights include Spanish Flash CPI, EZ Consumer Confidence (Final), German Prelim CPI, Japanese Unemployment & Retail Sales, Speech from ECB’s de Guindos, US Treasury Financing estimates Earnings from McDonald's & Lowes.
• Clock Change: UK Clocks switched to GMT from BST on 29th October, as such the London-New York time gap is four hours which will last for one week, until US clocks change on November 5th.

US TRADE

EQUITIES

• US stocks were pressured on Friday, while crude and gold prices rallied amid geopolitical tensions after initial reports regarding an agreement of a ceasefire were swiftly denied and Israel upscaled their bombardment of Gaza, while Israel also announced it was preparing for new incursions into the Gaza Strip.
• SPX -0.48% at 4,117, NDX +0.50% at 14,180, DJIA -1.12% at 32,417, RUT -1.21% at 1,636.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Former US Vice President Pence is suspending his presidential campaign, according to Politico.
• Stellantis (STLA) announced a tentative labour deal was reached with the UAW, although Canada's Unifor said strike action will commence at all Stellantis facilities in Canada. It was separately reported that UAW’s tentative agreement with Ford (F) includes a USD 5,000 ratification bonus, a USD 1,500 voucher towards a vehicle purchase and all new temporary employees will be converted to in-progress employees after 9 months. Conversely, UAW broadened its strike against GM (GM) with a walkout at the Spring Hill, Tennessee plant.

APAC TRADE

EQUITIES

• APAC stocks ultimately traded mixed but with the major indices mostly in the red as geopolitics continued to dominate headlines ahead of month-end and this week’s slew of upcoming risk events.
• ASX 200 was led lower by underperformance in energy and the top-weighted financial sector although the index moved off intraday lows as participants also digested stronger-than-expected Australian Retail Sales data.
• Nikkei 225 suffered as yields edged higher and the BoJ kick-started its 'live' 2-day policy meeting.
• Hang Seng and Shanghai Comp were both initially lower with financials pressured after mixed earnings from some of the large banks including China’s biggest commercial lender ICBC which posted flat profit for Q3, while there was turbulence in Evergrande shares owing to a wind-up hearing which was adjourned to December 4th. Nonetheless, the declines were stemmed in the mainland amid hopes of improving US-China ties after US Secretary of State Blinken met with Chinese Foreign Minister Wang Yi and agreed to work towards a Biden-Xi meeting in November.
• US equity futures nursed some of Friday's losses following Israel's more cautious than anticipated approach to its ground offensive in Gaza.
• European equity futures are indicative of a flat open after cash markets had closed -0.9% on Friday.

FX

• DXY was rangebound amid a lack of pertinent catalysts for the dollar and with participants sidelined heading into the key events from the US including the FOMC policy announcement mid-week and the latest NFP jobs report on Friday.
• EUR/USD traded steadily after last week’s choppy performance and recent comments from ECB’s Vujcic who suggested that the ECB was done hiking rates for now.
• GBP/USD was uneventful but held on to the 1.2100 status as participants also await the BoE meeting this week.
• USD/JPY lacked firm direction although found a floor around the 149.50 level ahead of tomorrow’s BoJ conclusion which is seen as a live meeting although most analysts expect no change in policy settings.
• Antipodeans were kept afloat with AUD/USD helped after Australian Retail Sales topped forecasts.
• PBoC set USD/CNY mid-point at 7.1781 vs exp. 7.3165 (prev. 7.1782)
• Eskom's CEO Cassim said they must delay plans to wind down its ageing coal power plants in order to reduce the number of blackouts, according to the FT.

FIXED INCOME

• 10-year UST futures were contained after marginally pulling back from Friday’s best levels and with participants lacking commitment ahead of month-end and approaching risk events.
• Bund futures remained firmer after last week’s spoils and recent ECB commentary regarding no more hikes.
• 10-year JGB futures were subdued as yields printed fresh multi-year highs including the 2-year JGB yield which rose to its highest since 2014 heading into the 2-year auction which also saw softer demand.

COMMODITIES

• Crude futures reversed the majority of Friday's gains after the lack of any major escalation on the geopolitical front, while reports also noted Saudi could refrain from hiking prices to clients in Asia.
• Saudi Arabia may refrain from raising its flagship oil price for Asian customers for the first time in six months as refinery margins weaken across the region which undercuts demand for physical cargoes, according to Bloomberg.
• The EU and UK are seeking a ban on subsidies for fossil fuel projects, according to FT.
• Russia’s Medvedev said Europe’s energy cooperation with Russia has been ruined or frozen for a very long time and that hard times have come for the EU, while he added that the EU can no longer act on its own and that energy cooperation with the EU is pointless, according to Reuters.
• Chevron (CVX) Australia spokesperson said proposed enterprise agreements for frontline field operations employees at Gorgon and Wheatstone gas facilities were backed by a majority of employees in a vote.
• Spot gold traded sideways and tested support at the USD 2,000/oz level which just about held.
• Copper futures were rangebound amid the mixed risk appetite in the Asia-Pacific region.

CRYPTO

• Bitcoin was marginally lower after an indecisive weekend performance but remained above USD 34,000.

NOTABLE ASIA-PAC HEADLINES

• US Secretary of State Blinken met with Chinese Foreign Minister Wang Yi and agreed to work towards a Biden-Xi meeting in November in San Francisco. Furthermore, Wang Yi said both sides hope Sino-US relations will stabilise as soon as possible, while he added that the road to San Francisco will not be smooth and is not on autopilot.
• Japanese Trade Minister Nishimura said G7 agreed to build reliable supply chains for critical minerals and chips to reduce dependency on a particular country.
• China's Embassy in Japan said G7 members undermine the level playing field and disrupt the security and stability of global production and supply chain, which followed calls by the G7 for a repeal of Japanese food bans.

DATA RECAP

• Australian Retail Sales MM (Sep F) 0.9% vs. Exp. 0.3% (Prev. 0.2%, Rev. 0.3%)

GEOPOLITICS

ISRAEL-GAZA

• Israeli PM Netanyahu said the ongoing ground operation in Gaza is the second stage of the war and said the war inside the Gaza Strip will be difficult and long, while he added that contacts to secure the hostage release are continuing even during the ground operation.
• Israeli Defence Minister Gallant said the army is inflicting heavy blows on Hamas and they have no interest in expanding the war but are prepared on all fronts.
• Israel conducted a strike on a military base in the western Daraa countryside in Syria where Iranian militias are stationed Furthermore, IDF carried out airstrikes against Hezbollah positions in southern Lebanon in response to the rocket and missile fire on northern Israel.
• US Marine rapid response force is moving towards the eastern Mediterranean, according to officials cited by CNN amid concerns the war in Gaza is broadening into a regional conflict.
• US President Biden spoke with Egyptian President El-Sisi and briefed him on US efforts to ensure that regional actors do not expand the conflict in Gaza, while the leaders committed to the significant acceleration and increase of assistance flowing into Gaza. It was separately reported that President Biden said the US is ready to take further action following attacks by Iran-linked groups against US forces in Iraq and Syria, according to Reuters.
• White House’s National Security Adviser Sullivan said it is unacceptable to have extremist settler violence against innocent people in the West Bank and that the US believes Israeli PM Netanyahu has the responsibility to rein in extremist settlers in the West Bank.
• UK PM Sunak and French President Macron discussed in a call the importance of getting urgent humanitarian support into Gaza and expressed their shared concern at the risk of escalation in the wider region, in particular in the West Bank.
• French Foreign Ministry said France strongly condemns attacks by settlers that have led to the deaths of several Palestinian civilians over the past few days in the West Bank, while it called on Israeli authorities to take immediate measures to protect the Palestinian population.
• UAE asked the UN Security Council to meet as soon as possible following Israel’s expanded ground operation in Gaza and condemned the ground operation, according to Reuters.
• Jordan's army said the kingdom asked the US to deploy Patriot air defence systems to help bolster border defences, according to Reuters.
• Turkish President Erdogan told a pro-Palestinian rally in Istanbul that Hamas is not a terrorist organisation and that Israel is the occupier, while he added that they will tell the whole world that Israel is a war criminal and are making preparations for this.
• Russia's aviation authority said Dagestan’s main airport will be closed until November 6th after it was stormed by a mob in protest against a plane carrying Israelis.

OTHER

• Russian Defence Minister Shoigu called the Russia-China relations model exemplary and said the West has openly set a course to inflict strategic defeat on Russia in a hybrid war unleashed against Moscow. Furthermore, Shoigu said the West, having provoked the crisis in Europe, is seeking to potentially expand the conflict to the Asia-Pacific region, while he added Moscow revoking the nuclear test ban treaty does not mean the destruction of military strategic balance, according to Reuters.
• North Korea said it is steadfast in its plans to expand bilateral relations with Russia and that the bilateral relationship with Russia does not target other countries.

EU/UK

NOTABLE HEADLINES

• ECB’s Vujcic said the ECB is finished with rate hikes for now and that a bigger part of hikes have already been transmitted to households and businesses, while he added that 2% inflation is attainable by 2025 and that they held rates as they have hiked adequately, according to an interview with Croatian state broadcaster HRT1.
• Fitch affirmed France at AA; Outlook Stable and affirmed Sweden at AAA; Outlook Stable, while it affirmed Bulgaria at BBB; Outlook Stable.