Chinese Markets Ride Manufacturing Pmi High

Stocks

Summary:

Chinese markets have put on an extraordinary performance this morning, boosted by better-than-anticipated manufacturing purchasing managers’ index data and hopes of further stimulus from Beijing in the latest leg of a rally that has been bubbling under for a month.

The China 50 index rallied by almost 8% on the session, the broader Shanghai Composite is up by 7.2% and Hong Kong's Hang Seng by almost 3%. KWEB US, the China internet ETF, has rallied 32.9% over the month, while Alibaba has put on 31.77% in that time and rival JD.com has rallied by almost 40% in the last week and 51.25% in the last month. Much of these gains will come down to investors and traders anticipating a full-blown recovery in the Chinese economy. It wasn't all good news in Asia, however, as Japan’s Nikkei 225 fell by almost 5% as the yen strengthened on the foreign exchanges. USD/JPY is trading at ¥141.99 in Europe, though interestingly the US dollar index is weakening at the same time, perhaps suggesting that there is more to the story than meets the eye.

Turning back to Friday's close, the S&P 500 energy sector finished the week with a 2.11% rally, led by stocks such as APA and Baker Hughes, which were up by 5.96% and 4.06% respectively. The trend could continue as oil prices have picked up again this morning, with WTI up by 1.43% and Brent crude by 1.64% on concerns about escalation of the conflicts in the Middle East, and any potential supply disruptions that could cause. The information technology sector, which has led the market for much of 2024 to date, finished Friday down by 0.96%, though on the week it was up by more than 1.1%. The S&P 500 was down by 0.23% on Friday and up by 0.62% on the week, and to some extent it felt like the index was waiting for the next catalyst. That could come in the shape of Friday’s non-farm payrolls report for September.

There were bigger moves in European equity indices last week, and not just from the usual suspects. The Euro Stoxx 50 was up 4%, and the CAC 40 3.9%, but they were outshone by the DAX Midcap index, which rallied by 5.3% on China revival hopes. At a sector level, the Euro Stoxx Personal and Households Goods index jumped by 14.4% last week, led by components like Christian Dior which rallied by 19% on the week. However, European equity indices have opened lower this morning, with the Italian MIB down by 0.71% at the time of writing.

Copper has rallied by over 1% in early European trade, on course for an 11% monthly gain. Gold and silver are flat this morning, though with the potential to book substantial gains for September as a whole Tin continues to rally, up 1.47% this morning, 2.45% over the last week, and by almost 30% over the last 12 months.

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

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Warren Takunda

Cryptocurrency

Bitcoin heads into the end of an uncharacteristically bullish “Rektember” up around 9% as anticipation of further BTC price gains builds.

A sell-off into the weekly close sees Bitcoin still preserving the majority of reclaimed support from last week.

Fed Chair Jerome Powell takes to the stage to start the week as markets square off over the size of November’s interest rate cut.

2024 may still mark Bitcoin’s best September on record, while “Uptober” typically promises 23% upside.

Retail interest in Bitcoin and crypto is edging back to the forefront, as measured by downloads of the Coinbase app.

Whales in the market for more than a few months are resisting the urge to take profits on the BTC positions.

$64K support retest fails to dent Bitcoin bulls’ confidence

In contrast to the past two weeks, Bitcoin saw a sell-off into the Sept. 29 weekly close as support in the mid-$64,000 range came in for a retest.

Data from Cointelegraph Markets Pro and TradingView shows local lows of $64,198 on Bitstamp before a modest recovery.

New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_1

BTC/USD 1-hour chart. Source: TradingView

With the monthly close now in sight, popular trader CrypNuevo, who predicted the comedown, was among those looking for a fresh long BTC position going forward.

“We could see some volatility related to the monthly close,” he acknowledged in a dedicated thread on X alongside a print of the 4-hour chart.

“So it's possible a sweep of the highs by then, that could get reversed back to support. From support, if we go up again and reclaim the highs, that's a long for me until the 2nd resistance.”

New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_2

BTC/USDT 4-hour chart. Source: CrypNuevo/X

CrypNuevo noted liquidity on exchange order books potentially favoring a trip toward $67,000 to come.

“Losing support will take us to the downside liquidations,” he added.

New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_3

BTC liquidation heatmap (Binance). Source: CrypNuevo/X

An optimistic Matthew Hyland meanwhile suggested that even a deeper BTC price correction would not mean the end of Bitcoin’s comeback on longer timeframes.

“If Bitcoin closes the weekly above $65k we will have established a higher-high and higher-low for the first time in 6+ months and established a trend change,” he told X followers.

“Dips going forward would be opportunity and bias must shift to bullish. Anything pullback $52.6k is just a higher-low.” New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_4

New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_4

BTC/USD 1-week chart. Source: Matthew Hyland/X

Markets eye Powell, US unemployment data

US Federal Reserve Chair Jerome Powell kicks off the macroeconomic week with a speaking appearance on Sept. 30.

Attending the National Association for Business Economics conference, Powell will be keenly watched for signals about the Fed’s next interest rate move.

After a surprise 0.5% cut this month, markets are eyeing a repeat performance at the next meeting of the Federal Open Market Committee (FOMC) on Nov. 7. The likelihood of this can change significantly, however, depending on Powell’s tone and macro data trends.

This week, unemployment figures take center stage, these already known as a Bitcoin volatility catalyst in 2024.

Commenting, trading resource The Kobeissi Letter considered the chances of the Fed being “behind the curve” in lowering rates.

“Falling rates initially did not work to prop up the economy as it takes 6 to 24 months for the effects to be felt,” it noted on X.

Kobeissi, however, is among those arguing that even the initial 0.5% decrease was going too far.

According to the latest estimates from CME Group’s FedWatch Tool, however, another 0.5% cut is in the lead for November on 52.2%. New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_5

New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_5

Fed target rate probabilities. Source: CME Group

Elsewhere, China embarking on sweeping economic stimulus measures is a topic firmly on risk-asset traders’ radar.

“China just posted 5 straight quarters of deflation, the longest streak since 1999,” Kobeissi said on the topic.

“Now, we are seeing capital pile back into equity markets as stimulus kicks off.”

Not such a “Rektember” after all?

While flagging slightly into the monthly close, Bitcoin is still looking at its best September performance on record.

Data from monitoring resource CoinGlass shows the striking contrast between 2024 and a typical September for BTC/USD. New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_6

New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_6

BTC/USD monthly returns (screenshot). Source: CoinGlass

Over the past ten years, Bitcoin ob average has tended to end the month down 3.6%, while at present, bulls are looking at around 9% gains.

Moving forward, there are even more exciting times lying in wait for bulls: October, known in crypto circles as “Uptober” thanks to its typically impressive market performance, is almost here. New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_7

New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_7

Source: BitcoinHyper

CoinGlass reveals a tough challenge for BTC/USD next month — average October upside is nearly 23%.

From current levels, this would mean a new all-time high — something that commentators nonetheless entertain as a distinct possibility.

“Altcoins are ready to do a 3-5x run, while Bitcoin is likely to break the all-time high coming quarter, following Gold,” crypto trader, analyst and entrepreneur Michaël van de Poppe forecast in one of his latest X posts.

Since 2013, there have only been two “red” October months, these seeing maximum losses of just under 13%.

Coinbase bounces back

A key element of BTC price action since March’s all-time has been a preciptious drop in retail investor participation.

Interest among mainstream consumers fell significantly as Bitcoin and crypto retraced in the half year that followed. Now, however, change may well be afoot.

As Cointelegraph reported, exchanges and trading are slowly headed back into the mainstream consciousness, as evidenced by downloads of one app in particular — that of largest US trading platform Coinbase.

On Sept. 28, the Coinbase app ranked among the top 400 on the Apple AppStore, while research shows that once it reaches the top 200, bull market conditions tend to be in full swing.

“In other words, more people started downloading the app when bitcoin was testing all time highs (November 2020 at $20k, and March 2024 at $69-74K),” its author, analytics account Bitcoindata21, wrote in an X post earlier this month.

Bitcoindata21 likewise noted that when Coinbase is outside the top-500 most popular apps, crypto markets tend to be in a bearish phase.

“Most importantly, the app reached no.1 in December 2017, April 2021, and November 2021…,” they concluded. New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_8

New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_8

Coinbase app downloads. Source: Bitcoindata21/X

The Coinbase premium, meanwhile, which measures the difference in exchange prices between Coinbase’s BTC/USD pair and the BTC/USDT on largest global exchange Binance, is now positive again.

Young whales show their colors

When it comes to market moves originating from large-volume investors, onchain data suggests that a new trend is emerging.

In one of its Quicktake blog posts on Sept. 27, onchain analytics platform CryptoQuant drew a distinction between old and new Bitcoin whales.

“Over the past month, whales with over 155 days of inactivity have been less dominant in profit-taking as the price of bitcoin has recovered,” contributor Cauê Oliveira revealed.

“On the other hand, new whales have been actively taking profits, indicating that the interest in closing positions is predominant among institutional players who have entered the market in the past 5-6 months.” New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_9

New All-Time High in 'Uptober?' 5 Things to Know in Bitcoin This Week_9

Bitcoin whale realized profits (screenshot). Source: CryptoQuant

An accompanying chart showed realized profits by whale cohort — and old hands remain firmly entrenched in their positions.

“Old institutional investors have been more dominant in the first half of the year, with high levels of profit-taking, but now appear to be waiting for a more favorable market for their positions,” Oliveira added.

“This may be reducing selling pressure at this point, providing room for the price to build a more positive structure in this recovery.”

Source: Cointelegraph

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Owen Li

Economic

Edotco Group Sdn Bhd chief executive officer Mohamed Adlan Ahmad Tajudin said such incentives could facilitate investments towards sustainable energy solutions.

“This would help offset the high upfront costs that industry players have to face, and encourage them to adopt clean energy sources like solar and wind.

“Additionally, a cash-back programme for environmental, social and governance (ESG) initiatives, similar to those for electric vehicle purchases, can be considered. This may attract telecommunication companies to integrate sustainability practices, which align with the nation’s green goals,” he told Bernama recently when asked about the industry’s Budget 2025 wishlist.

An alternative is to improve access to green bonds and competitive financing options for RE projects, coupled with stringent ESG reporting standards.

“This would provide the necessary financial support, while driving companies to enhance transparency and sustainability efforts, motivating boards to take more decisive action on ESG initiatives,” he added.

Mohamed Adlan pointed out that telecommunication companies in Malaysia are currently facing rising energy consumption costs due to the growing demand for network accessibility.

While RE such as solar is an option, he said its implementation remains challenging due to the geographically dispersed nature of telecommunication networks, making it difficult to achieve economies of scale with energy-efficient solutions.

Apart from that, Mohamed Adlan said the limited availability of sustainable green energy sources also poses an obstacle to RE transition.

In Malaysia, businesses can subscribe to renewable energy certificates (RECs), benefititng from feed-in tariff (FIT) schemes, or installation of solar panels under the net energy metering mechanism.

However, he said the supply of RE is still limited, based on a first-come-first-serve basis.

He also welcomes frameworks that encourage telecommunication companies to participate in large-scale solar (LSS) projects and energy efficiency programmes, which will enable the sector to reduce its carbon footprint, while maintaining operational efficiency.

This includes allocating LSS projects specifically for the telecommunications industry, he said.

“Currently, solar power producers (SPPs) tend to enter [solar service] agreements (SSAs) with high-energy-consuming industries, like factories, rather than individual telecommunication companies, which have relatively lower emissions.

“By enabling telecommunication companies to engage in SSAs collectively, it could make the agreements more attractive to SPPs, fostering competitive pricing that benefits both parties,” he added.

Furthermore, this collective approach would also accelerate the industry’s RE adoption, aligning with Malaysia’s sustainability goals, while ensuring cost-effective energy solutions for telecommunication, Mohamed Adlan said.

Mohamed Adlan said Edotco, which is a telecommunication infrastructure company, has made significant strides in its RE transformation since it was established in 2012.

To date, the company operates 2,604 telecommunication towers around Asia, with 159 towers in Malaysia, 184 towers in Pakistan, Myanmar (381), and Bangladesh (1,880), which are now running on RE.

“These highlight our efforts to expand RE use across our operations, and contribute to the region’s green transition,” he said.

Prime Minister Datuk Seri Anwar Ibrahim is expected to table the 2025 budget on Oct 18 in Parliament.

Source: The edge markets

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Cohen

Economic

A port strike on the US East Coast and Gulf of Mexico will go ahead starting on Tuesday, the International Longshoremen’s Association union said on Sunday, signalling action that could cause delays and snarl supply chains.

"United States Maritime Alliance ... refuses to address a half-century of wage subjugation," the union said in a statement. The United States Maritime Alliance, known as USMX, represents employers of the East and Gulf Coast longshore industry.

USMX did not immediately comment.

If union members walk off the job at ports stretching from Maine to Texas, it would be the first coast-wide ILA strike since 1977, affecting ports that handle about half the nation's ocean shipping.

A source said no negotiations were taking place Sunday and none are currently planned before the midnight Monday deadline. The union said previously the strike would not impact military cargo shipments or cruise ship traffic.

White House spokesperson Robyn Patterson said late Sunday that over the weekend, senior officials have been in touch with USMX representatives "urging them to come to a fair agreement fairly and quickly — one that reflects the success of the companies." The officials also delivered the same message to ILA, she added.

Earlier on Sunday, President Joe Biden said he did not intend to intervene to prevent a walkout if dock workers failed to secure a new contract by an Oct 1 deadline.

"It's collective bargaining. I don't believe in Taft-Hartley," he told reporters. Presidents can intervene in labor disputes that threaten national security or safety by imposing an 80-day cooling-off period under the federal Taft-Hartley Act.

Reuters first reported on Sept 17 that Biden did not plan to invoke the Taft-Hartley provision, citing a White House official.

A strike could stop the flow of everything from food to automobiles at major ports — in a dispute that could jeopardise jobs and stoke inflation weeks ahead of the US presidential election.

Business Roundtable, which represents major US business leaders, said it was "deeply concerned about the potential strike at the East Coast and Gulf Coast ports."

The group warned a labor stoppage could cost the US economy billions of dollars daily "hurting American businesses, workers and consumers across the country. We urge both sides to come to an agreement before Monday night’s deadline."

For months, the union has threatened to shut down the 36 ports it covers if employers like container ship operator Maersk and its APM Terminals North America do not deliver significant wage increases and stop terminal automation projects.

The dispute is worrying businesses that rely on ocean shipping to export their wares, or secure crucial imports.

The USMX employer group has accused the ILA of refusing to negotiate.

Source: Theedgemarkets

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Justin

Economic

Britain will become the first G7 country to end coal-fired power production with the closure of its last plant, Uniper’s UN0k.DE Ratcliffe-on-Soar in England’s Midlands.

It will end over 140 years of coal power in Britain.

In 2015 Britain announced plans to close coal plants within the next decade as part of wider measures to reach its climate targets. At that time almost 30% of the country’s electricity came from coal but this had fallen to just over 1% last year.

“The UK has proven that it is possible to phase out coal power at unprecedented speed,” said Julia Skorupska, Head of the Powering Past Coal Alliance secretariat, a group of around 60 national governments seeking to end coal power.

The drop in coal power has helped cut Britain's greenhouse gas emissions, which have more than halved since 1990.

Britain, which has a target to reach net zero emissions by 2050, also plans to decarbonise the electricity sector by 2030, a move which will require a rapid ramp-up in renewable power such as wind and solar.

“The era of coal might be ending, but a new age of good energy jobs for our country is just beginning," energy minister Michael Shanks said in an emailed statement.

Emissions from energy make up around three quarters of total greenhouse gas emissions and scientists have said that the use of fossil fuels must be curbed to meet goals set under the Paris climate agreement.

In April the G7 major industrialised countries agreed to scrap coal power in the first half of the next decade, but also gave some leeway to economies who are heavily coal-reliant, drawing criticism from green groups.

“There is a lot of work to do to ensure that both the 2035 target is met and brought forward to 2030, particularly in Japan, the U.S., and Germany,” said Christine Shearer, Research Analyst, Global Energy Monitor .

Coal power still makes up more than 25% of Germany's electricity and more than 30% of Japan’s power.

Source: Theedgemarkets

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SAXO

Commodity

Forex:

Following two weeks of short covering, speculators once again turned net sellers of a weakening dollar amid rising risk appetite following the recent US rate cut, and not least after China’s leaders initiated a series of fiscal and monetary stimulus measures that helped fuel confidence, particularly among the activity currencies, led by the Australian dollar, which benefitted from the prospect of increased demand for its raw materials. Overall, the dollar short against eight IMM futures jumped 61% to USD 14.7 billion, with all except CHF seeing net buying, led by a 72% reduction in the AUD short and a 38% increase in the GBP net long. Meanwhile, the JPY net long rose for a 12th consecutive week to reach a fresh eight-year high at 66k contracts.

Commodities:

In the latest reporting week to 24 September, the Bloomberg Commodity Index jumped 3.4% as the positive impact of the recent US rate cut—reducing recession fears and lowering funding costs—was followed by a barrage of Chinese stimulus measures, potentially increasing demand from the world’s top consumer of raw materials. Gains were seen across all sectors, particularly the energy sector, where the China focus lifted crude oil prices, before prices stumbled again later in the week as the focus returned to the prospect of rising supply.

Elsewhere, China-dependent sectors, especially industrial metals, enjoyed a strong week while weather concerns continued to underpin the agriculture sector, where gains were led by soybeans, sugar, and cocoa. Finally, precious metal traders showed a relatively lukewarm buying response to another record high in gold, with silver increasingly attracting attention given its relative cheapness compared to gold.

Overall, hedge funds increased their weekly commodities exposure by the largest number of contracts in at least a decade, with all of the 27 major futures contracts, except five, seeing net buying. On an individual contract level, those that stood out were WTI, Brent, natural gas, copper, soybeans, and sugar.

COT: Fed and PBOC Trigger Largest Weekly Surge in Commodities Demand in a Decade_2

COT: Fed and PBOC Trigger Largest Weekly Surge in Commodities Demand in a Decade_3

COT: Fed and PBOC Trigger Largest Weekly Surge in Commodities Demand in a Decade_4

COT: Fed and PBOC Trigger Largest Weekly Surge in Commodities Demand in a Decade_5

COT: Fed and PBOC Trigger Largest Weekly Surge in Commodities Demand in a Decade_6

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators)

The main reasons why we focus primarily on the behavior of speculators, such as hedge funds and trend-following CTA's are:

They are likely to have tight stops and no underlying exposure that is being hedgedThis makes them most reactive to changes in fundamental or technical price developmentsIt provides views about major trends but also helps to decipher when a reversal is looming

Do note that this group tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness, meaning that they are often found holding the biggest long near the peak of a cycle or the biggest short position ahead of a through in the market.

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