26 October 2023
Dear clients,
Poor lending data and weak purchasing managers' surveys confirmed what traders had already guessed: The rate hike cycle in Europe is over.
Markets believe there is little chance of a rate hike and see a recession on the horizon.
Absent surprises, trading is likely to hinge on earnings - Unilever (ULVR.L), Mercedes (MBGn.DE) and Amazon (AMZN.O) report on Thursday - and the behaviour of yields and the yen.
Google's disappointing results for its cloud division led to the sharpest drop in Alphabet shares since March 2020 on Wednesday, and they fell further in after-market trading in Asian hours.
The yen has surpassed the 150 per dollar mark and is now trading at its lowest level since Japanese authorities intervened last October to push the market higher.
On Wednesday, 10-year Treasury bond yields rallied towards 5% after a rise in US home sales gave further cause for concern about continued high interest rates. Nasdaq futures fell 1%.
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Good luck in trading!
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