Gravity of US election dwarfs peripheral themes of earnings and monetary easing cycles

Notes/observations

- Marginal risk on flows as US dollar trims and equities bid, albeit in lighter volume as traders sit on hands ahead of election results; Vote is today and initial early accurate results for who is on track to win will likely drop during Asia’s next session.

- Key timing phases on Election Night: Phase 1: Early Evening (6:00 - 9:00 PM ET; GA and NC may provide partial results if the races are close, while VA and OH could release nearly complete results by 9 PM, offering early indicators of the night’s trends). Phase 2: Late Evening (9:00 PM - 2:00 AM ET: states like MI, WI, PA, and AZ will start showing more concrete results; and Phase 3: Overnight into Morning (2:00 AM - 12:00 PM ET, Nov 6: PA,widely considered a tipping-point state, will likely release additional results due to its streamlined processes, but may still require additional time if the race is close; Then, counting will continue, particularly in NV and AZ).

- Boeing trading higher in premarket after IAM Union voted to accept 38% pay increase over four years, ending a 53-day strike.

- Notable EU earnings from DHL, Hugo Boss, Uniper, ABF, Orsted, Audi and IWP.

- Upcoming US premarket earnings will focus on: TRGP, HSIC, TRI, APO, MPC, TKR, ARCH, ADM, AGCO, CMI, BR, YUM, EMR, PGR, EXPD.

- Asia closed mixed with Shanghai Composite outperforming +2.3%. EU indices are -0.1% to +0.3%. US futures are +0.1-0.3%. Gold +0.1%, DXY -0.1%; Commodity: Brent +0.6%, WTI +0.6%; Crypto: BTC +0.1%, ETH -1.3%.

Asia

- RBA left Cash Rate Target unchanged at 4.35%. Policy would need to be sufficiently restrictive until the Board was confident that inflation was moving sustainably towards the target range. Remained resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome. Reiterates Board was not ruling anything in or out.

- Australia Oct Final PMI Service (confirms 9th month of expansion (51.0 v 50.6 prelim).

- China Oct Caixin PMI Services registered its 21st month of expansion: 52.0 v 50.5e).

- South Korea Oct CPI registered its slowest annualized pace since early 2021] (M/M: 0.0% v 0.2%e; Y/Y: 1.3% v 1.4%e).

- New Zealand Oct ANZ Commodity Price M/M: No est v 1.8% prior.

- China Premier Li Qiang reiterated confident of meeting 2024 GDP growth target.

- RBNZ Gov Orr stated that the real economy was lagging reduction in interest rates and that was a concern.

Europe

- UK Oct British Retail Consortium (BRC) LFL Sales Y/Y: 0.3% v 1.4%e [matched the slowest pace since July.

- Germany Econ Min Habeck noted that billions from Intel could help plug budget gap (**Note: move seen as extending an olive branch to avert coalition collapse).

Americas

- IAM Union voted to accept a 38% pay raise over 4 years to end a 53 day strike at Boeing [BA].

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.13% at 509.84, FTSE +0.31% at 8,209.52, DAX +0.20% at 19,201.85, CAC-40 +0.09% at 7,378.33, IBEX-35 +0.13% at 11,820.11, FTSE MIB +0.35% at 34,662.00, SMI -0.16% at 11,893.60, S&P 500 Futures +0.13%].

Market Focal Points/Key Themes: European indices open mixed but took on a positive trend in the early part of the session; risk appetite seen buoyed by earnings; among sectors leading the gainers are materials and consumer discretionary; lagging sectors include real estate and energy; oil & gas subsector impacted after OPEC reported supply increase; EQT to acquire OEM International; UK CMA conditionally approves Vodafone-Three could satisfy competition concerns; Atos sells Worldgrid to ALTEN; focus on US trade balance to be released later in the day; earnings expected in the upcoming Americas session include Ferrari, Cummin’s Dupont and Henry Schein.

Equities

- Consumer discretionary: Carrefour [CA.FR] +1.0% (said to be looking at ways to increase its valuation, including potential sale if buyers emerge; No current talks taking place), Hugo Boss [BOSS.DE] -4.0% (earnings), Deutsche Post [DHL.DE] -3.0% (final earnings), Zalando [ZAL.DE] +0.5% (Q3 results, affirms guidance) - Consumer staples: Associated British Foods [ABF.UK] +4.5% (FY results) - Energy: Vestas Wind Systems [VWS.UK] -10.0% (earnings).

- Healthcare: Evotec [EVT.DE] +2.5% (sells its chemical API manufacturing site), Fresenius Medical Care [FME.DE] +3.5% (Q2 results, adjusts guidance) - Industrials: Airbus [AIR.FR] +0.5% (Boeing workers votes to end strike), Adecco [ADEN.CH] -8.5% (Q3 results, below estimates; comments on Oct trends) - Technology: Infineon [IFX.DE] +0.5% (Foxconn monthly sales) - Telecom:

-Materials: Salzgitter [SZG.DE] +30.0% (shareholders GP Gunter Papenburg and TSR Recycling considering takeover offer; Terms not disclosed).

Speakers

- Japan Industrial Union UA Zensen said to target 6% wage increase in upcoming spring 2025 negotiations.

Currencies/fixed income

- FX markets were at a standstill as it awaited the results of the US Presidential election. Dealers and participants were exercising caution as they wait for the outcome of what looks set to be closely contested elections.

- EUR/USD inching slightly higher towards 1.09. Dealers played with various scenarios of the election outcome. A Harris win could send the euro above $1.10. A Trump win or a contested outcome on the other hand could move capital to the greenback were some suggestions.

- GBP/USD was at 1.2980 area with focus also on the upcoming BOE rate decision on Thursday.

- AUD/USD at 0.6620 after RBA kept its policy and rhetoric unchanged. Dealers noted the decision was consistent with a strong labor market despite headline inflation falling to target in 3Q. Rate cuts appear to be some time off in the future.

- Spot gold hit a fresh all-time high above $2,800/oz.

Economic data

- (CH) Swiss Oct Unemployment Rate: 2.5% v 2.5%e; Unemployment Rate (seasonally adj): 2.6% v 2.6%e.

- (ZA) South Africa Oct PMI (whole economy): 50.6 v 51.0 prior (3rd month of expansion).

- (SE) Sweden Oct PMI Services: 52.9 v 48.9 prior; PMI Composite: # v 49.7 prior.

- (HU) Hungary Sept Preliminary Trade Balance: €1.2B v €1.3Be.

- (FR) France Sept Industrial Production M/M: -0.9% v -0.6%e; Y/Y: -0.6% v -0.4%e.

- (FR) France Sept Manufacturing Production M/M: -0.8% v -1.1%e; Y/Y: -0.9% v -0.1% prior.

- (FR) France Sept YTD Budget Balance: -€173.8B v -€171.9B prior.

- (ES) Spain Oct Unemployment Change: +26.8K v +27.0Ke; Net Change In Employment M/M: +67.9K v +22.2K prior.

- (TW) Taiwan Oct Foreign Reserves: $576.9B v $577.9B prior.

- (UK) Oct New Car Registrations Y/Y: -6.0% v +1.0% prior.

- (UK) Oct Official Reserves Changes: -$1.0B v +$2.1B prior.

- (UK) Oct Final Services PMI: 52.0v 51.8 prelim (confirmed 12th month of expansion); Composite PMI: 51.8 v 51.7 prelim.

Fixed income issuance

- (ID) Indonesia sold total IDR10.2T vs. IDR9.0T indicated in Islamic bills and bonds (sukuk).

- (ES) Spain Debt Agency (Tesoro) sold total €4.96B vs. €4.5-5.5B indicated range in 6-month and 12-month bills.

- (ZA) South Africa sold total ZAR3.75B vs. ZAR3.75B indicated in 2033, 2038 and 2040 bonds.

- (UK) DMO sold £3.75B in 4.25% July 2034 Gilts; Avg Yield: 4.475% v 4.170% prior; bid-to-cover: 2.81x v 3.25x prior; Tail: 0.8bps v 0.9bps prior.

- (AT) Austria Debt Agency (AFFA) sold total €1.725B vs. €1.725B indicated in 2034 and 2044 RAGB bonds.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (CH) Switzerland to sell 3-month Bill.

- 05:30 Germany cancelled plan to sell Green Bunds.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €4.0B in 1-month, 3-month and 6-month bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 06:30 (CL) Chile Central Bank (BCCh) Oct Minutes.

- 06:30 (TR) Turkey Oct Real Effective Exchange Rate (REER): No est v 62.78 prior.

- 06:30 ESM to sell €1.1B in 3-month Bills.

- 06:30 (TR) Turkey to sell bonds (2 tranches).

- 07:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Sept Trade Balance: -$84.1Be v -$70.4B prior.

- 08:30 (CA) Canada Sept Int’l Merchandise Trade (CAD): -1.2Be v -1.1B prior.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:30 (CA) Canada Oct Services PMI: No est v 46.4 prior; Composite PMI: No est v 47.0 prior.

- 09:30 (EU) ECB chief Lagarde.

- 09:45 (US) Oct Final S&P Services PMI: 55.3e v 55.3 prelim; Composite PMI: 54.3e v 54.3 prelim.

- 10:00 (US) Oct ISM Services Index: 53.8e v 54.9 prior; Prices Paid: No est v 59.4 prior.

- 10:30 (CA) Canada to sell 1-month, 3-month, 6-month and 12-month bills.

- 13:00 (US) Treasury to sell 10-Year Notes.

- 13:30 (CA) Bank of Canada (BOC) Oct Summary of Deliberations.

- (MX) Mexico CitiBanamex Survey of Economists.

- 16:30 (US) Weekly API Oil Inventories.

- 16:45 (NZ) New Zealand Q3 Unemployment Rate: 5.0%e v 4.6% prior.

- 16:45 (NZ) New Zealand Q3 Employment Change Q/Q: -0.4%e v +0.4% prior; Y/Y: 0.1%e v 0.6% prior.

- 16:45 (NZ) New Zealand Q3; Avg Hourly Earnings Q/Q: No est v 1.1% prior; Private Wages (including overtime) Q/Q: 0.7%e v 0.9% prior; Participation Rate: 71.5%e v 71.7% prior.

- 18:50 (JP) Japan BOJ Sept Minutes (2 decisions ago).

- 19:30 (JP) Japan Oct Final Services PMI: No est v 49.3 prelim; Composite PMI: No est v 49.4 prelim.

- 20:00 (PH) Philippines Sept Trade Balance: -$3.6Be v -$4.4B prior; Exports Y/Y: 2.8%e v 0.3% prior; Imports Y/Y: 1.5%e v 2.7% prior.

- 20:00 (PH) Philippines Sept Unemployment Rate: No est v 4.0% prior.

- 20:30 (KR) Bank of Korea (BOK) to sell KRW2.2T in 2-year bonds.

- 21:35 (CN) China to sell 2-year Bonds.

- 22:30 (TH) Thailand Oct CPI M/M: +0.1%e v -0.1% prior; Y/Y: 0.9%e v 0.6% prior; CPI Core Y/Y: 0.8%e v 0.8% prior.

- (US) President, Senate and House of Representatives Election.