Tesla and Boeing earnings in spotlight – US election is 12-days away

Notes/observations

- Macro takes back seat to micro picture as Europe sees wave of corporate earnings, including Lloyds, Iberdrola, Reckitt, Handelsbanken, Deutsche Bank, Thales, Volvo, Air Liquide, WPP and Heineken.

- Near term horizon remains on catalysts from payrolls next week and US election in under 2 weeks on Nov 5th. Trump trade gaining momentum.

- Yen weakness causes USD/JPY to sail past 152, with no sign of verbal intervention from Senior JP officials at this time.

- Crude oil dips after higher US API inventories.

- McDonald’s confirmed report of e.coli outbreak linked to Quarter Pounders, which will be removed from menu in 4 US states; Outbreak may be linked to slivered onions from one regional supplier.

- Boeing’s IAM worker union to vote on proposed 35% pay offer, same day that Boeing reports Q3 results.

- Upcoming US Premarket Earnings: VRT, TMO, BSX, AVY, KO, WGP, CME, T, TNL, KBR, GD, BA, NEE; Tesla set to report results after the close with one of the main focuses likely to be on any comments regarding more affordable vehicle models and Tesla’s margins pace.

- Asia closed mixed with Hang Seng outperforming +1.3%. EU indices are -0.3% to +0.1%. US futures are -0.2% to -0.4%. Gold +0.2%, DXY +0.2%; Commodity: Brent -1.0%, WTI -1.0%; Crypto: BTC -0.8%, ETH -2.3%.

Asia

- South Korea Oct Consumer Confidence: 101.7 v 100 prior.

- China think tank CASS said to propose $280B stock market stabilization fund.

- India PM Modi and Pres Xi of China to hold talks today (Wed) on sidelines of BRICS Summit.

Europe

- ECB members said to be starting to debate whether rates would have to move below neutral level.

- ECB's Patsalides (Cyprus, voter) noted that was beginning the debate whether rates needed to go below neutral in current cycle.

- ECB's Villeroy (France): Inflation persistence was no longer sole, dominant risk; Risk of removing restrictive rates too late could rise.

- ECB's Rehn (Finland): Euro area disinflation was well on track; Rate cuts were coming, with speed and scope to be decided later.

Energy

- Weekly API Crude Oil Inventories: +1.6M v -1.6M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.22% at 519.24, FTSE -0.27% at 8,283.97, DAX -0.25% at 19,395.45, CAC-40 -0.54% at 7,494.72, IBEX-35 +0.07% at 11,840.96, FTSE MIB -0.16% at 34,677.00, SMI -0.20% at 12,144.70, S&P 500 Futures -0.16%].

Market focal points/key themes: European indices open mixed with a downward bias that became more pronounced through early trading; markets seen affected by reports ECB discussion whether inflation will undershoot due to slow economic growth; Israel closed for holiday; among sectors holding on to gains are consumer staples and utilities; sectors leading the way lower include consumer discretionary and materials; chemicals subsector weighed down following disappointing results from Akzo Nobel and Air Liquide; focus on flash EuroArea consumer confidence later in the day; earnings expected in the upcoming US session include Tesla, Coca-Cola, AT&T, Vertiv, Carrefour and Michelin.

Equities

- Consumer discretionary: Heineken [HEIA.NL] +1.5% (Q3 results, misses estimates, affirms guidance), Adidas [ADS.DE] -1.5% (HSBC cuts to hold) - Consumer staples: L’Oreal [OR.FR] -3.5% (Q3 sales; noted China market even more challenging).

- Financials: Deutsche Bank [DBK.DE] -3.5% (Q3 results, affirms guidance), Lloyds [LLOY.UK] +1.5% (Q3 results, above estimates, affirms FY guidance) - Healthcare: Roche [ROG.CH] +0.5% (earnings) - Industrials: Volvo Cars [VOLCARB.SE] -3.5% (Q3 results, beats estimates, cuts guidance), SSAB [SSABA.SE] -0.5% (Q3 results), Thales [HO.FR] -1.5% (Q3 results, affirms guidance) - Technology: Atoss Software [AOF.DE] +0.5% (9M results, affirms most guidance, raises EBIT margin).

- Telecom: WPP [WPP.UK] +4.0% (Q3 trading update).

-Utilities: Iberdrola [IBE.ES] +2.5% (9M results, raises FY guidance; conf call comments).

-Materials: Akzo Nobel [AKZA.NL] -4.5% (Q3 results, misses estimates, cuts guidance; conf call comments).

Speakers

- Germany Economic Ministry noted that it was working to protect steel market; Needed to defend ourselves from aggressive Chinese policy and America first policy.

Currencies/fixed income

- FX markets were quiet in dull trading on Tuesday with the USD registering more gains against the major pairs and continued to be aided by higher US rates and solid economic outlook for the US compared to its peers.

- EUR/USD below 1.08 area as ECB members continued to view concerns over the economic outlook for the region. Reports circulated that ECB members were starting to debate whether rates would have to move below neutral level. The probability of a 50bps cut at the Dec meeting rose to 40% from 25% over the past 24 hours.

- GBP/USD staying below the 1.30 level.

- USD/JPY probe the 152 level with 152-55 area viewed as key resistance. No concerns yet to be express by Japanese officials over the yen weakness. This area previously invoked verbal and actual FX intervention in the past.

Economic data

- (DK) Denmark Oct Consumer Confidence: -8.9 v -6.8 prior.

- (TR) Turkey Oct Consumer Confidence: 80.6 v 78.2 prior.

- (RO) Romania Sept M3 Money Supply Y/Y: 9.0% v 10.8% prior.

- (ZA) South Africa Sept CPI M/M: 0.1% v 0.1%e; Y/Y: 3.8% v 3.8%e.

- (ZA) South Africa Sept CPI Core M/M: 0.3% v 0.3%e; Y/Y: 4.1% v 4.1%e.

- (TW) Taiwan Sept Industrial Production Y/Y: 11.2% v 11.4%e.

- (PL) Poland Oct Consumer Confidence: -15.8 v -14.1e.

- (PL) Poland Sept Unemployment Rate: 5.0% v 5.0% prior.

- (IS) Iceland Sept Wage Index M/M: 0.7% v 0.1% prior; Y/Y: 6.1% v 6.3% prior.

Fixed income issuance

- (IN) India sold total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK1.92B in 2026 and 2033 DGB Bonds.

- (UK) DMO sold £4.0B in 3.75% Mar 2027 Gilts; Avg Yield: 4.082% v 4.068% prior; bid-to-cover: 3.29x v 3.33x prior; Tail: 0.6bps v 0.3bps prior.

- (SE) Sweden sold total SEK4.0B vs. SEK4.0B indicated in 2029 and 2035 Bonds.

- (GR) Greece Debt Agency (PDMA) sold €M vs €500M indicated in 6-month Bills; Avg Yield: % v 2.85% prior; bid-to-cover: x v 2.12x prior.

Looking ahead

- G20 Finance Minister and central bank meeting (ECB’s Lagarde attends).

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

- 05:30 (DE) Germany to sell €4.0B in 2.60% Aug 2034 Bunds.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (CZ) Czech Republic to sell combined CZK8.0B in 2034 and 2036 Bonds.

- 07:00 (RU) Russia to sell OFZ Bonds.

- 07:00 (US) MBA Mortgage Applications w/e Oct 18th: No est v -17.0% prior.

- 07:00 (UK) Weekly PM Question time in House.

- 07:30 (SE) Sweden Central Bank (Riksbank) Jansson.

- 08:00 (MX) Mexico Aug Retail Sales M/M: 0.2%e v 0.7% prior; Y/Y: -0.1%e v -0.6% prior.

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

- 09:00 (US) Fed’s Bowman.

- 09:00 (UK) BOE’s Breeden.

- 09:45 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to cut Interest Rates by 25bps to 4.00%.

- 10:00 (US) Sept Existing Home Sales: 3.89Me v 3.86M prior.

- 10:00 (EU) Euro Zone Oct Advance Consumer Confidence: -12.5e v -12.9 prior.

- 10:00 (EU) ECB chief Lagarde on EU economic outlook.

- 10:00 (IE) ECB’s Lane (Ireland, chief economist participates on panel at Institute of International Finance (IIF).

- 10:30 (US) Weekly DOE Oil Inventories.

- 10:30 (CA) Bank of Canada (BOC) Gov Macklem post rate decision press conference.

- 11:00 (US) Treasury to sell 17-Week Bills.

- 11:30 (IT) ECB’s Cipollone (Italy).

- 12:00 (RU) Russia Sept Industrial Production Y/Y: 3.2%e v 2.7% prior.

- 12:00 (US) Fed’s Barkin.

- 12:00 (ES) ECB’s Escriva (Spain).

- 13:00 (NZ) RBNZ Gov Orr on Monetary Policy.

- 13:00 (US) Treasury to sell 20-Year Bond Reopening.

- 14:00 (US) Federal Reserve Releases Beige Book.

- 14:15 (NL) ECB’s Knot (Netherlands.

- 14:45 (UK) BOE Gov Bailey.

- 15:00 (AR) Argentina Aug Economic Activity Index (Monthly GDP) M/M: -0.3%e v +1.7% prior; Y/Y: -5.3%e v -1.3% prior.

- 15:00 (JP) BOJ Gov Ueda.

- 15:00 (PT) ECB’s Centeno (Portugal).

- 16:30 (UK) BOE Gov Bailey.

- 17:00 (KR) South Korea Nov Business Manufacturing Survey: No est v 73 prior; Non-Manufacturing Survey: No est v 71 prior.

- 18:00 (AU) Australia Oct Preliminary PMI Manufacturing: No est v 46.7 prior; PMI Services: No est v 50.5 prior; PMI Composite: No est v 49.6 prior.

- 19:00 (KR) South Korea Q3 Advance GDP (1st of 3 readings) Q/Q: +0.4%e v -0.2% prior; Y/Y: 1.9%e v 2.3% prior.

- 20:30 (JP) Japan Oct Preliminary Manufacturing PMI: No est v 49.7 prior; Services PMI: No est v 53.1 prior; Composite PMI: No est v 52.0 prior.

- 21:00 (CN) China Sept Swift Global Payments (CNY): No est v 4.7% prior.

- 22:35 (CN) China to sell 1-year and 10-year Bonds.

- 23:35 (JP) Japan to sell 20-year JGB Bonds.