FX.co ★ Traders May Take A Breather Following Recent Strength On Wall Street

The major U.S. stock index futures suggest a flat opening on Tuesday, indicating a potential pause in the bullish momentum that concluded the previous session on a positive note. Investors may be adopting a cautious approach to assess the recent upward trend, which propelled the Dow Jones and S&P 500 to reach unprecedented heights.

Goldman Sachs (GS) is anticipated to show initial strength, with the investment bank's shares up 2.9 percent in pre-market trading. This rise follows Goldman Sachs' third-quarter earnings report, which surpassed analyst expectations both in terms of revenue and profit margins.

Bank of America (BAC) might also see an upward movement after unveiling its third-quarter earnings, which exceeded market forecasts. Conversely, UnitedHealth (UNH) shares might face downward pressure, despite reporting better-than-expected third-quarter results, due to a reduction in the upper range of its full-year earnings outlook.

After a robust performance last Friday, stocks continued to ascend on Monday, with the Dow Jones and the S&P 500 notching new record-closing highs. The primary indices peaked towards the session's end but conceded some ground before closing. The Dow gained 201.36 points, or 0.5 percent, closing at 43,065.22. The Nasdaq rose by 159.75 points, or 0.9 percent, to 18,502.69, while the S&P 500 advanced 44.82 points, or 0.8 percent, to 5,859.85.

The persistent vigor on Wall Street was fueled by optimism regarding interest rates, following Friday's benign report on producer price inflation. The Labor Department disclosed that producer prices unexpectedly remained unchanged in September, with the annual growth rate slowing slightly.

Although expectations for a 50-basis-point Federal Reserve rate cut next month have dissipated, the data bolstered confidence in a 25-basis-point reduction. The CME Group's FedWatch Tool currently reflects an 86.1 percent probability that the Fed will trim rates by a quarter-point in their November meeting.

Despite this optimism, trading volumes remained somewhat low, with some investors likely absent due to the Columbus Day holiday. Additionally, the paucity of significant U.S. economic data may have prompted some traders to sit on the sidelines ahead of key reports on retail sales and industrial output due later in the week.

Semiconductor stocks performed exceptionally well, as evidenced by a 1.8 percent surge in the Philadelphia Semiconductor Index. Housing stocks also exhibited notable strength, with the Philadelphia Housing Sector Index climbing 1.6 percent. Likewise, airline, utilities, and banking stocks experienced substantial gains, although networking stocks trended downward.

**Commodity and Currency Markets**

In the commodities arena, crude oil futures are dropping by $2.98 to $70.85 per barrel, following a $1.73 decrease to $73.83 per barrel on Monday. Concurrently, gold futures are climbing $7.10 to $2,672.70 an ounce after a $10.70 decline to $2,665.60 an ounce in the prior session.

On the forex market, the U.S. dollar stands at 149.01 yen, down from 149.76 yen in New York's last trading session. Against the euro, the dollar is valued slightly higher at $1.0911 compared to Monday’s $1.0909.

**Asia**

Asian stocks saw a broad uptick on Tuesday, spearheaded by Japanese markets after Prime Minister Shigeru Ishiba suggested that his administration seeks to formulate a supplementary budget for the current fiscal year exceeding the previous year's 13.1 trillion yen ($87.6 billion) economic aid package.

On the other hand, Chinese and Hong Kong markets lagged following uninspiring weekend announcements by authorities regarding economic support. The Shanghai Composite Index in China slid by 2.5 percent to 3,201.29, reflecting uncertainties over Beijing's proposed fiscal stimulus size. Hong Kong’s Hang Seng Index dropped sharply by 3.7 percent to settle at 20,318.79, with technology and real estate stocks dragging it down.

In other developments, the media outlet Caixin reported that China might consider raising an additional 6 trillion yuan ($850 billion) through ultra-long special government bonds over three years to invigorate its slowing economy.

Meanwhile, gold prices dipped, and the dollar reached a two-month high after Federal Reserve Governor Christopher Waller advised a more cautious approach to cutting interest rates. Conversely, oil prices decreased nearly 4 percent, extending a three-day downward trend, following reports that Israel's planned retaliatory strike on Iran would avoid targeting nuclear or oil infrastructure, thereby alleviating immediate supply disruption concerns.Japanese equities have experienced a significant uptick, while the yen has softened from a two-and-a-half-month peak, driven by positive sentiment regarding the U.S. economic outlook and the anticipation that the Bank of Japan will refrain from further interest rate hikes this year.

The Nikkei average advanced by 0.8% to reach 39,910.55, marking an upward trend for the fourth consecutive session. Simultaneously, the broader Topix Index rose by 0.6% to 2,723.57 as traders returned after a national holiday.

In Seoul, the stock market closed higher for the third consecutive day, with technology shares spearheading the gains. Leading the charge, tech giant Samsung Electronics saw a modest increase of 0.3%, while its competitor in the semiconductor space, SK Hynix, surged by 2.9%. Consequently, the Kospi Index nudged up by 0.4% to 2,633.45.

Australian markets achieved a new record high, bolstered by strong performances in the banking and mining sectors. The benchmark S&P/ASX 200 Index climbed 0.8% to 8,318.40, with the All Ordinaries Index also closing 0.8% higher at 8,598.60.

Across the Tasman Sea in New Zealand, the benchmark S&P/NZX 50 Index gained 0.6% to finish at 12,840.77.

### Europe

European stock markets exhibited a mixed performance on Tuesday following two sessions of gains. Sentiment was influenced by a mix of regional economic data and geopolitical concerns in the Middle East, ahead of Thursday's European Central Bank meeting.

In Germany, wholesale prices declined at the sharpest rate in five months during September, while investor confidence improved for the first time in four months, as separate statistics illustrated.

France experienced a slight slowdown in consumer price inflation during September, reaching its lowest level in three and a half years, attributed to lower energy costs, according to the statistical office INSEE.

Meanwhile, data from the UK highlighted a decline in wage growth to its lowest point in over two years in the three months leading up to August, reinforcing expectations of additional interest rate cuts by the central bank at its upcoming meeting.

The German DAX Index increased by 0.3%, while the UK's FTSE 100 Index and the French CAC 40 Index declined by 0.4% and 0.9%, respectively.

Energy giants BP Plc and Shell experienced significant declines as oil prices plunged by as much as $3 to a near two-week low, following a reduced demand forecast from the IEA and reports that Israel's expected retaliatory attacks on Iran will exclude nuclear and oil facilities.

Workspace Group, an office-rental company, also saw a decrease after experiencing a notable drop in like-for-like occupancy due to an unusually high departure rate among customers in the second quarter.

In Paris, shares of TotalEnergies SE fell after the oil major cautioned that its third-quarter downstream results are likely to decline due to reduced refining margins both in Europe and elsewhere.

Deutsche Bank's share price slipped following reports of a sale of approximately 16 million shares in the German bank, priced at 16.01 euros ($17.43) each.

Conversely, LM Ericsson's shares surged in Stockholm after the Swedish telecom leader reported a profit in the third quarter, reversing a loss from the previous year.

Bellway shares also rose sharply after the company delivered encouraging commentary on the recovery status of the UK housing market.

Tele2 AB advanced with the announcement of Jean-Marc Harion's appointment as President and CEO, effective November 10, 2024.

### U.S. Economic News

Following a significant rebound last month, the Federal Reserve Bank of New York released a report on Tuesday indicating that regional manufacturing activity reverted to contraction in October.

The New York Fed's index of general business conditions plummeted to -11.9 in October from 11.5 in September, with a negative reading signaling contraction. Economists had anticipated a decline to a positive 2.3.

Despite the downturn, optimism regarding the six-month economic outlook surged, as reflected in the future business activity index, which climbed to a multi-year high of 38.7 in October from 30.6 in September.

At 11:30 am ET, San Francisco Federal Reserve President Mary Daly is scheduled to partake in a moderated discussion at an event hosted by the New York University Stern School of Business.

Federal Reserve Board Governor Adriana Kugler will also participate in a moderated discussion at the "Exploring Careers in Economics" webcast conference at 1 pm ET.

Later, at 7 pm ET, Atlanta Federal Reserve President Raphael Bostic is set to join a conversation on the economic outlook and its impact on small businesses at an event hosted by the Gathering Spot.