US stocks declined amid earnings releases and geopolitical risks - Newsquawk Asia-Pac Market Open

• US stocks declined throughout the session despite the lack of an obvious catalyst other than ongoing geopolitical angst even though there was no material worsening of the situation in Israel. Nonetheless, the weakness was led by the small-cap Russell 2k index and NQ futures flirted beneath 15k before rebounding from lows post-Netflix earnings.
• USD strengthened amid the broader risk-averse sentiment and as participants sought safety from the geopolitical risk. There were also several comments from Fed speakers in which both Bowman and Williams suggested inflation was still elevated, while Harker and Waller all but confirmed a pause at the November meeting and the attention now shifts to Fed Chair Powell who will be speaking at the Economic Club of New York.
• Looking ahead, highlights include Japanese Trade Data, Australian Jobs Data & NAB Business Confidence, Chinese House Prices, BoK Rate Decision, Speech from Fed's Cook, Supply from Japan.

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LOOKING AHEAD

• Highlights include Japanese Trade Data, Australian Jobs Data & NAB Business Confidence, Chinese House Prices, BoK Rate Decision, Speech from Fed's Cook, Supply from Japan.

US TRADE

• US stocks declined throughout the session despite the lack of an obvious catalyst other than ongoing geopolitical angst even though there was no material worsening of the situation in Israel. Nonetheless, the weakness was led by the small-cap Russell 2k index and NQ futures flirted beneath 15k before rebounding from lows post-Netflix earnings.
• SPX -1.34% at 4,314, NDX -1.41% at 14,909, DJIA -0.98% at 33,665, RUT -2.11% at 1,728.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bowman (voter) said inflation has come down, but it is still too high and the Fed is highly focused on returning inflation to 2%, while she added that strength in goods spending has been surprising.
• Fed's Harker (voter) reiterated that the Fed should extend its pause on rate increases, according to WSJ.
• Fed's Waller (voter) said it is too soon to tell if more policy rate action is needed and that they can wait, watch and see before making definitive moves on the policy path. Waller added they can hold policy rates steady if the real economy slows and more action on the policy rate would be needed if demand and economic activity keep up the recent pace. Waller also commented that they need to see how inflation progresses in the next 6-12 months and then see about cutting rates but added that no one expects any kind of rate cut soon and that if long rates go up, that will do some of the Fed's work.
• Fed's Williams (voter) said inflation has come down quite a bit although still a ways to go to get down to the target. Williams added they are not declaring victory, but sees progress and will "stick at it" to get inflation back to the target.
• Fed Beige Book for October noted there was little change in economic activity since September and that the labour market tightness continued to ease, while wage growth remained modest to moderate and prices continued to increase at a modest pace.
• US GOP Rep. Jim Jordan lost the House Speaker vote again for the second time and a spokesperson said Jordan is not dropping out, while Jordan said he hasn't decided whether to pursue a third round of votes.
• US SEC Chair Gensler said the SEC is still weighing Bitcoin ETF proposals.

DATA RECAP

US Building Permits (Sep) 1.47M vs. Exp. 1.45M (Prev. 1.54M) US Housing Starts (Sep) 1.36M vs. Exp. 1.38M (Prev. 1.28M, Rev. 1.27M)

FIXED INCOME

• US Treasuries ultimately bear-steepened with initial haven demand unwound into the US 20yr auction which went well.

FX

• USD strengthened amid the broader risk-averse sentiment and as participants sought safety from the geopolitical risk. There were also several comments from Fed speakers in which both Bowman and Williams suggested inflation was still elevated, while Harker and Waller all but confirmed a pause at the November meeting and the attention now shifts to Fed Chair Powell who will be speaking at the Economic Club of New York.
• EUR was pressured amid the dollar strength and continued to retreat below the 1.0600 handle.
• GBP declined alongside the downbeat mood and after failing to sustain the 1.2200 status despite the recent firmer-than-expected UK inflation data.
• JPY remained subdued against the dollar as US yields edged higher which marginally lifted USD/JPY closer to the 150.00 'intervention threshold'.

COMMODITIES

• Crude prices were firmer but off their highs amid the fluid Israel situation, strong China data and bullish inventories.
• US EIA Wkly Crude Stockpiles (W 13 Oct) -4.5M vs. Exp. 0.5M (Prev. 10.2M)
• Iranian Foreign Minister said Iran calls on Islamic countries to impose an oil embargo on the Zionist regime", according to Al Jazeera.
• OPEC+ reportedly plans no extraordinary meeting or immediate action following the Iranian Foreign Minister calling for an Israeli oil embargo, according to Reuters citing sources.
• Russian oil exports via their western ports are set to decline in November as refineries conclude their maintenance, according to Reuters citing sources.
• US State Department senior official said US plans some oil-related sanctions relief for Venezuela beginning almost immediately in response to Tuesday's election deal between Venezuela’s government and opposition. However, the US is prepared to reverse the easing of sanctions on Venezuela if it fails to take steps including lifting bans on opposition presidential candidates and the release of political prisoners.

GEOPOLITICAL

• White House said the US's current assessment shows Israel is not responsible for the Gaza hospital explosion with the assessment based on overhead imagery, intercepts and open source.
• US President Biden said there is an agreement with Israel to allow for humanitarian aid to move from Egypt to Gaza and he reiterated support for a two-state solution.
• Israeli PM's office said will not prevent Egypt from delivering food, water and medicine to civilians in south Gaza. Furthermore, a spokesman for the Israeli PM earlier said they are ready to fight on several fronts at the same time, according to Sky News Arabia.
• Lebanon's Hezbollah said they attacked Israeli sites and barracks, according to Al Manar TV. It was separately reported that Lebanon's Foreign Minister said continued aggression on Gaza could ignite a fire that could consume the whole region.
• UN Middle East peace envoy said the risk of an expansion of this conflict is very real and extremely dangerous.
• Russian President Putin said the supplies of ATACMS missiles to Ukraine create additional threats and is a mistake by the US, according to TASS.
• Russia is strengthening its western borders in anticipation of F-16 deliveries to Ukraine next year, according to the Russian Defence Minister.
• G7 officials plan a technical meeting to discuss four proposals for a Russian diamond ban plan on Thursday, while the debate will include proposals by Belgium, France, India and the World Diamond Council, according to Reuters citing sources and documents.

ASIA-PAC

NOTABLE HEADLINES

• China reportedly decided to send at least one representative to the UK's AI summit in November, according to FT citing officials, although officials cautioned that China could change its mind.

EU/UK

NOTABLE HEADLINES

• ECB's Visco said inflation is not yet consistent with underlying price stability. Visco also stated he is closely monitoring situations of weakness and vulnerability in some less significant Italian banks.

DATA RECAP

• UK CPI YY (Sep) 6.7% vs. Exp. 6.6% (Prev. 6.7%)
• UK Core CPI YY (Sep) 6.1% vs. Exp. 6.0% (Prev. 6.2%)
• EU HICP Final MM (Sep) 0.3% vs. Exp. 0.3% (Prev. 0.5%)
• EU HICP Final YY (Sep) 4.3% vs. Exp. 4.3% (Prev. 4.3%)