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UK Manufacturing PMI, CBI SME Trends Survey, Nationwide House Price Index, Narrow money (Notes & Coin) and reserve balances; trading updates from GSK, Wolters Kluwer, Orsted, Next, Weir Group, Smurfit Kappa Group, Ryanair Holdings, Koninklijke Vopak

Opening Call:

Stock futures rose ahead of the Fed decision later today. In Asia, stock benchmarks were mostly higher; the dollar strengthened slightly; Treasury yields edged lower; while oil futures rose and gold fell.


European stock futures advanced ahead of key events including the Federal Reserve interest-rate decision later Wednesday. Investors are preparing for the Bank of England meeting and the U.S. jobs report later in the week.

Fed officials are likely to hold interest rates steady at this week's policy meeting. Still, they have left the door open to further increases in the coming months if progress stalls in slowing wage and price growth.

"The higher rate environment has not fully seeped into stock valuations. Hopefully we're almost there," said Nicholas Galluccio, portfolio manager of the Teton Westwood SmallCap Equity Fund.

Galluccio has been positioning for a rebound by buying shares of smaller tech businesses that supply the giant firms that have led the rally earlier this year as well as industrial companies with order backlogs, such as Flowserve, which sells pumps and valves to energy and chemical producers. "I haven't seen stocks this cheap since before Covid," he said.


The recent push into the dollar as U.S. long-term rate expectations reset higher has likely largely run its course, according to Jean Boivin, head of BlackRock's Investment Institute.

Boivin said long-term yields have more room to rise from here, but that's because investors will demand more compensation for holding duration risk in their portfolios, not because investors will be piling into U.S. assets.

"So, rates as a driver of a higher dollar is likely waning, which is consistent with the dollar moving sideways or perhaps a bit weaker from here," Boivin said.


Treasury yields edged lower in Asia after ending little changed overnight as investors looked ahead to today's Fed announcement.

"The Fed will almost certainly leave rates unchanged, as it skips another meeting to assess the impact of higher long-end yields on economic activity," said Marvin Loh, senior global macro strategist for State Street.

"We expect Powell to restate points he made at his last appearance a few weeks ago, where they can afford to be patient in the face of rising yields, although evidence of persistently higher inflation and continued employment tightness would warrant additional tightening. Essentially, the Fed will maintain optionality for another hike, while remaining in full data dependence mode."


Oil futures rose early Wednesday, rebounding after the front-month WTI crude oil contract finished overnight at its lowest since Aug. 28.

Prices may test the Oct. 6 swing low, so the bulls will want to see that hold or there could be a quick move into the $79.00/bbl-$78.50/bbl area, said Pepperstone.


Gold fell slightly amid mild strength of USD. Given the slate of important U.S. data releases and the Fed's rate decision, the most likely outcome is that gold may weaken a little bit, said Fawad Razaqzada, market analyst at City Index and;!!F0Stn7g!Eaeok3Hwv90UntCTBVtEg6jvg7eOpO9ycyurCQGl3YrDL09i-oQD78cfaSHKDjVQY_tyNW76xp838cwYtaonSPbdr6wJGfaKBcclaMVHvzA$ .

Also, November is usually not a strong month for gold, and with global rates seen staying high for longer, the opportunity cost of holding onto something that doesn't pay any interest or dividends is high, he added.


Copper edged lower, weighed by weak China Caixin manufacturing PMI data, as well as worse-than-expected official manufacturing PMI data released Tuesday.

The data raise worries over China's economic recovery, ANZ said. This suggests there is more work needed to boost economic growth, despite the government's recent support measures, it added.


Citi is more bullish about the iron-ore price outlook after China stepped up efforts to bolster the economy. Citi now expects iron ore to average $120/ton over the next three months, up from a forecast of $100/ton.

"Iron ore's near-term demand strength in China and the absence of any meaningful steel production cuts could leave prices susceptible to potential further China easing," Citi said. "The next few months will be a key window to watch to see if Beijing introduces additional supporting measures and engineers a strong start to 2024."


China Factory Activity Slides Into Contraction, Caixin PMI Shows

A private gauge of China's factory activity fell into contraction in October, suggesting continued economic headwinds despite Beijing's recent efforts to shore up growth.

The Caixin manufacturing purchasing managers index fell to 49.5 in October from 50.6 in September, falling into contractionary territory for the first time in three months, according to data released Wednesday by Caixin Media Co. and S&P Global. The 50-mark separates expansion from contraction.

Fed Officials Debate Whether They Have Raised Rates Enough

The Federal Reserve is likely to leave its benchmark interest rate unchanged this week at a 22-year high while keeping open the possibility of another rate hike to fight inflation.

Officials, whose two-day policy meeting concludes Wednesday, could raise rates again in December or next year if the economy doesn't cool as they expect and inflation picks up again after slowing since June.

Workers Keep Getting Big Raises, Just Not as Much as Last Year

American workers are still commanding big pay raises, though not quite as beefy as last year. That is good news for workers but a potential complication for the Federal Reserve's fight to lower inflation.

Employers spent 1.1% more on wages and benefits in July through September than in the prior three months, according to the Labor Department's employment-cost index, released Tuesday. That was slightly better than the 1% gain in the second quarter and a sign that wage pressures remained strong as economic growth accelerated.

AI could spark the next financial crisis, SEC Chair Gary Gensler says

Securities and Exchange Commission Chair Gary Gensler has plenty to worry about as he seeks to bring order and fairness to America's $100 trillion capital markets, and there are few issues that cause him more concern than the spread of artificial-intelligence technology.

In an exclusive interview with MarketWatch, the regulator argued that generative AI technologies in the vein of ChatGPT have the potential to revolutionize the way we invest by leveraging large data sets to "predict things that were unimaginable even 10 years ago," but that these new powers will come with great risks.

Prada Posts Higher Revenue With Growth in All Products, Most Regions

Prada reported an increase in revenue for the first nine months of the year, boosted by growth across all product categories and most of its markets.

Net revenue came in at 3.34 billion euros ($3.55 billion), up 17% at constant exchange rates, the Italian luxury-fashion house said on Tuesday.

Israeli Airstrike Hits Crowded Refugee Camp in Northern Gaza

Israel said Tuesday it hit a Hamas command and tunnel network in northern Gaza, causing widespread damage in a crowded Palestinian refugee camp.

Israel said it killed dozens of militants, including a commander who it said led the Oct. 7 attacks in Israel. Hamas said hundreds were dead or wounded but didn't say how many were militants, while hospital officials in Gaza reported receiving scores of bodies.

After a Boom and Bust, the Chip Industry Is Regaining Its Health

The global semiconductor industry is bottoming out, executives say, signaling a rebound in some areas of technology and providing relief for the U.S. government, which is spending billions on expanding chip production.

In recent weeks, executives at Intel, Taiwan Semiconductor Manufacturing Co. and Samsung Electronics have expressed confidence that the worst is over for the chip industry, which had been in a prolonged slump.

Match Group, Google Reach Binding Term Sheet in Legal Battle

Match Group and Alphabet-unit Google reached a binding term sheet for a settlement regarding their claims against each other in their legal battle.

The online dating company said in a letter to shareholders that $40 million placed in escrow will be returned to Match and no other amount will be owed by the Match plaintiffs to Google. The parties agreed that by March 31, Match's apps, which include Tinder and Hinge, will implement Google's user choice billing.

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Expected Major Events for Wednesday

00:01/UK: 4Q CBI SME Trends Survey

01:01/IRL: Oct Ireland Manufacturing PMI

06:00/NED: Oct Netherlands Manufacturing PMI

07:00/TUR: Oct Turkey Manufacturing PMI

07:00/UK: Oct Nationwide House Price Index

08:30/CZE: Oct Czech Republic Manufacturing PMI

08:30/SWI: Oct;!!F0Stn7g!Eaeok3Hwv90UntCTBVtEg6jvg7eOpO9ycyurCQGl3YrDL09i-oQD78cfaSHKDjVQY_tyNW76xp838cwYtaonSPbdr6wJGfaKBcclox-ooxk$ Purchasing Managers' Index

09:00/GRE: Oct Greece Manufacturing PMI

09:30/UK: Oct S&P Global / CIPS UK Manufacturing PMI

09:30/UK: Oct Narrow money (Notes & Coin) and reserve balances

10:00/CYP: Sep Retail trade

15:59/UKR: Sep Industrial Production

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11-01-23 0117ET