Watch For:

EU money supply in the euro area, ECB President Christine Lagarde speaks at Bank of Greece official dinner, EU Tripartite Social Summit; U.K. monthly automotive manufacturing figures; Germany Ifo business climate index; France Pole emploi unemployment; trading updates from Air Liquide, Banco Santander, Deutsche Bank, Porsche, Carrefour, Traton, Beiersdorf, X5 Retail Group, SSAB, Koninklijke (Royal), SEB, Assa Abloy, Telenor, Fresnillo, Reckitt Benckiser Group, Lloyds Banking Group, Heineken, Anglo American,

Opening Call:

Stock futures are higher; Asian benchmarks are also broadly higher. The dollar weakened slightly; Treasurys were mixed; while oil futures gained and gold declined.


European stock futures are tracking higher buoyed by the better-than-expected earnings season so far.

About 23% of S&P 500 companies have already reported earnings, and 77% of them have posted earnings surpassing analysts' expectations, according to FactSet.

"If the rest of the earnings season goes as well as early announcements have gone, especially by consumer-facing companies, we will be well positioned for a decent Christmas rally going into year-end," Louis Navellier, chairman and founder of Navellier & Associates, said.

"Sentiment has improved in part due to hopes of interest rates having peaked, something which looks increasingly likely given the further cooling of inflationary pressures," S&P Global Market Intelligence said.

However, investors remain worried about the U.S. treasury market following the sharp run-up in long-term yields.

"Supply demand imbalances have everyone focused on how demand is holding up from these Treasury auctions," Oanda said.

"Next week's Treasury refunding announcement could be important as they could reduce auctions at the long end of the curve as they are concerned about the recent moves with yields."

Reviving an equity rally may require not just further declines in yields but also additional support from the continuing third-quarter corporate earnings reporting season, analysts said.


The dollar weakened slightly early Wednesday amid improving risk appetite.

U.S. President Biden and Saudi Crown Prince Mohammed bin Salman have agreed to pursue efforts to prevent the Israel-Hamas war from escalating, said Michael Wan, senior currency analyst at MUFG Bank.

Also, China has ramped up economic support by lifting its fiscal deficit ratio to 3.8% of GDP from 3% and increasing the issuance of central government debt, Wan added.


Treasury yields were mixed in Asia as traders weighed U.S. economic strength against the potential for a mid-November government shutdown and the lack of a ground invasion by Israel of Gaza.

"With the pre-FOMC silent period underway and a light data calendar the first half of the week, political developments and coupon auctions are the most likely culprits for significant changes in the Treasury market before the Q3 GDP release Thursday," said Will Compernolle, macro strategist at FHN Financial.

"Israel's ground invasion of Gaza that felt imminent has still not happened, reversing some flight-to-safety trades the last couple weeks, but the risk of escalation will still be in the spotlight for the foreseeable future," he said.

Markets are pricing in a 99.7% probability that the Fed will leave interest rates unchanged between 5.25%-5.5% on Nov. 1, according to the CME FedWatch Tool.


Oil futures gained in Asia.

However, oil prices could remain modestly lower if diplomatic efforts to contain the Israel-Hamas conflict continue, Oanda said.

Traders also looked to the latest eurozone composite purchasing managers index data, which declined to 46.5 from 47.2 in September, the latest evidence of a slowdown in manufacturing activity that could tamp down inflation and weigh on oil demand.

Traders are awaiting the release of official inventory data from the U.S. Energy Information Administration on Wednesday.


Gold edged lower early Wednesday.

Investors are monitoring the Israel-Hamas conflict to gauge the chance of it turning into a wider Middle East conflict.

Although gold prices have pulled back lately, too many geopolitical, debt, and credit risks remain on the table, Oanda added.


Copper prices were higher after U.S. PMI data showed business activity picking up after recent months of stagnation and as China stepped up fiscal support to boost the economy, ANZ analysts said.

Robust U.S. economic data have helped ease concerns that tighter monetary policy and rising borrowing costs would weigh on investment and industrial activity, the analysts said.

The Chinese government's issuance of additional sovereign debt and the rise in the country's fiscal deficit target boosted sentiment, the analysts added.


Iron ore futures climbed in Asia.

Sentiment has been boosted after China ramped up economic support, ANZ Research analysts said in a research report, citing the government's measures including the lifting of its fiscal deficit target to 3.8% of GDP from 3%.

This additional support for China's economy has helped push iron ore futures higher, the analysts added.


GDP bonanza: U.S. economy may have grown 5% in the third quarter

The U.S. economy has not only defied widespread predictions of a sharp slowdown. It's grown even faster.

But that doesn't mean a recession is far away. The U.S. has often experienced fast growth shortly before the bottom fell out.

The 2-Year Treasury Auction Saw Soft Demand. Why It Matters.

Tuesday's auction of two-year Treasury notes saw tepid demand, signaling that investor enthusiasm for Treasuries continues to soften amid concerns about the federal deficit and the path of interest rates.

The U.S. Treasury Department conducted an auction of $51 billion of two-year notes Tuesday afternoon.

Iranian-Backed Militias Mount New Wave of Attacks as U.S. Supports Israel

U.S. Secretary of State Antony Blinken warned Tuesday that Washington would react "swiftly and decisively" if Iran or its proxy forces attack U.S. personnel after Tehran raised the risk of a larger Middle East conflict in recent days by unleashing the regional militias it has spent years arming.

For more than six months, these Iranian-backed militia groups refrained from launching drones or rockets against American troops in Iraq and Syria, as part of what appeared to be an undeclared truce between Tehran and Washington.

China Increases Bond Issuance to Help Its Economy

China ramped up efforts to stimulate its beleaguered economy, issuing additional sovereign bonds and raising its budget-deficit target, the first time it revised its budget outside the regular legislative session in more than a decade.

The country's top legislative body approved on Tuesday a plan to raise 1 trillion yuan, equivalent to around $137 billion, in additional sovereign debt, half for use before the end of this year and half for next year, according to the official Xinhua News Agency. Policy makers said the bond issuance was intended for infrastructure projects in the wake of severe flooding and other natural disasters, Xinhua reported.

Pro Take: Tech Leaders Launch Effort to Support Critical Israeli Tech Startups

A group of venture capital professionals are launching an effort to connect early-stage startups in Israel with investors around the world who are willing to provide them with emergency capital and other resources.

The effort, called Frontline Initiative, is designed to help young startups withstand the financial and business pressures created by the nation's war with Hamas. The war poses the greatest challenge for early-stage startups, which are critical to the nation's future, said Roy Glasberg, founder, managing partner and company builder at Tel Aviv-based AnD Ventures.

Finland Suspects Chinese Ship's Anchor Damaged Gas Pipeline

Finland said that a Chinese ship's anchor had likely caused a mysterious rupture of an undersea gas pipeline in the Baltic Sea earlier this month that raised concerns about the vulnerability of European infrastructure to sabotage amid mounting tension between Russia and the West.

The damage of the pipeline linking North Atlantic Treaty Organization member states Finland and Estonia, as well as the disruption of two telecommunications cables that happened around the same time, came after months of efforts by governments to beef up security around Europe's vital energy, information and transportation networks.

Despite Israel-Hamas War, It's (Nearly) Business as Usual at Saudi Investment Forum

RIYADH, Saudi Arabia-The titans of Wall Street chatted under crystal chandeliers. With the Israel-Hamas war intensifying 900 miles away, the gathering made for an awkward split screen.

The world's business elite had come together for the Future Investment Initiative-nicknamed "Davos in the Desert"-where topics of discussion included artificial intelligence, futuristic planned cities and the growing perils of higher interest rates and rising debt loads.

Kering Sales Miss Forecasts Amid Luxury Industry Slowdown

Kering posted sales below analysts' expectations for the third quarter, becoming the latest fashion group to reel from a slowdown in the luxury-goods industry as the postpandemic boom fades.

The owner of Gucci and Yves Saint Laurent on Tuesday reported revenue of EUR4.46 billion ($4.76 billion) in the three months to the end of September, down 13% in reported terms and 9% on a comparable scope and exchange-rate basis. Analysts had forecast sales of EUR4.52 billion, according to FactSet.

Microsoft Earnings Growth Accelerates on Stronger-Than-Expected Cloud Demand

Microsoft's sales growth accelerated last quarter as demand for its cloud computing services heated up amid growing enthusiasm about artificial intelligence.

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10-25-23 0015ET