Harris Beats Biden, Lags Trump on Crypto Policy — Galaxy Research

Singapore continues to draw strong investments despite global corporate shifts, with the Singapore Economic Development Board (EDB) securing $5.4 billion in fixed asset investment (FAI) commitments in the first half of 2024.

This keeps the EDB on track to meet its medium-to-long-term investment commitment goal of $8 billion to $10 billion in FAI this year, Deputy Prime Minister and Trade and Industry Minister Gan Kim Yong said on Oct 14.

In 2023, the EDB attracted $12.7 billion in FAI commitments, following a record $22.5 billion in 2022, driven by a surge in semiconductor investments.

Mr Gan was responding to Member of Parliament Yip Hon Weng, who asked about multinational companies relocating, downsizing, or retrenching workers in Singapore, as well as the key factors driving these decisions and concerns over the local workforce’s competitive edge.

Tech giants Dyson, Samsung Electronics, Amazon and Google are among companies that have laid off employees in Singapore this year.

In his written response, Mr Gan said: “Singapore remains an attractive location for investments.”

He noted that firms, including large multinationals, may reduce or exit their operations in Singapore due to market shifts or changes in global strategies, he said.

“In such situations, the government works closely with the companies and unions to assist the retrenched workers with skills upgrading and job matching,” he noted.

In May, cloud service provider Amazon Web Services (AWS) and pharmaceuticals giant AstraZeneca announced major investment commitments to the Republic.

AWS committed $12 billion for cloud and AI infrastructure over the next four years, while AstraZeneca will build a $2 billion facility for antibody drug conjugates.

“These investments will translate into good jobs for Singaporeans,” said Mr Gan, reiterating that some 60 per cent of locals earning over $12,500 a month work for foreign-owned firms.

Source: Straitstimes

Stocks hit fresh all-time highs as investors looked ahead to Corporate America for further vindication of soft-landing bets.

Without much in the way of economic data this week, earnings reports are poised to drive Wall Street sentiment. The S&P 500 rose almost 1%, notching another record — its 46th this year. That’s a hint investors are not deterred by the reduced forecasts for third-quarter results, and are instead betting this reporting season will once again deliver positive surprises.

Strategists are predicting S&P 500 firms will post their weakest results in the past four quarters, with just a 4.3% increase compared with a year ago, Bloomberg Intelligence data show. Meantime, corporate guidance implies a jump of about 16%. That solid outlook suggests companies could easily beat market expectations.

“Wall Street has underestimated Corporate America lately,” said Callie Cox at Ritholtz Wealth Management. “This environment is tough to get a read on, and I don’t blame anybody who’s approaching this rally with a bit of skepticism. We still think the biggest – and most expensive – risk here is to miss a rebound and an eventual rally higher.”

The S&P 500 hovered near 5,860 amid thin trading volume. The Nasdaq 100 added 0.8%. The Dow Jones Industrial Average climbed 0.5%. Nvidia Corp. led gains in megacaps, Apple Inc. gained on a bullish analyst call and Tesla Inc. rebounded after last week’s plunge. Goldman Sachs Group Inc. and Citigroup Inc. advanced ahead of results.

Treasury futures were marginally lower while cash trading was closed for a US holiday. The dollar edged up. Bitcoin jumped 5%. Oil declined after China’s highly anticipated Finance Ministry briefing on Saturday lacked specific new incentives to boost consumption in the world’s biggest crude importer.

Earnings season unofficially kicked off on Friday, led by financial bellwethers JPMorgan Chase & Co. and Wells Fargo & Co. On top of other big banks reporting this week, traders will be paying close attention to results from key companies like Netflix Inc. and JB Hunt Transport Services Inc.

An initial round of third-quarter financial results last week showed Corporate America is benefitting from lower rates early into the Federal Reserve’s easing cycle, according to Bank of America Corp. strategists.

Easing rates pressure was seen in a surge in debt underwriting, mortgage applications and refinancing activity, as well as signs of a bottom in manufacturing, the BofA team including Ohsung Kwon and Savita Subramanian said.

To Solita Marcelli at UBS Global Wealth Management, third-quarter results should confirm that large-cap corporate profit growth is solid against a resilient macro backdrop.

“We maintain our positive outlook for US equities, supported by healthy economic and profit growth, the Fed’s easing cycle, and AI’s growth story,” she said. “While valuations are high, we think they are reasonable against the favorable backdrop.”

Marcelli reiterated her S&P 500 price target of 6,200 by June 2025, and continues to like “AI beneficiaries and quality stocks.”

An improving trend in US macro data should continue to offer support for stocks tied to economic momentum, according to Morgan Stanley strategist Mike Wilson.

“Further stabilization in the economic surprise index should support quality cyclicals even if it comes amid higher yields,” Wilson and his team wrote in a note.

Better US data and supportive policy have helped lower downside risks near-term, according to Goldman Sachs Group Inc. strategists led by Christian Mueller-Glissmann. They shifted to overweight equities and underweight credit for the next three months.

The strategists noted equities can deliver attractive returns driven by earnings growth and valuation expansion in late-cycle backdrops, while credit total returns are usually constrained by tight credit spreads and rising yields.

While they think the risk of a bear market remains relatively low, the analysts see potential for volatility due to geopolitical shocks, US elections, and less favorable growth/inflation mix.

“Last week, the S&P 500 index surpassed our year-end price objective of 5,800,” said Craig Johnson at Piper Sandler. “We are leaving it unchanged for now but realize some ‘fine-tuning’ is needed as we expect equities to continue trending higher after the US presidential election.”

Despite the above-average gain in the first two years of this bull market, history says that investors need to be prepared for a possible setback in the coming 12 months, according to Sam Stovall at CFRA.

The average return following the 11 bull markets that celebrated their second anniversary was 2% (5.2% excluding those that became bear markets before the third year was out, Stovall noted. What’s more, all experienced a decline of 5%, while five endured selloffs in excess of 10% but less than 20%, and three succumbed to new bear markets. Despite this unsettling intra-year volatility, three bulls posted double-digit gains.

While bull markets that have made it this long have tended to go on a lot longer before they finally experience a 20% drop, that doesn’t mean there haven’t been hiccups along the way, according to Bespoke Investment Group.

Overall, the S&P has seen weaker-than-average returns in year three of bull markets, the firm said. The index has averaged a gain of just 3.7% in the 12 months following day 503 of past bull markets — with positive returns just 55% of the time. That compares to an average gain of 9.26% across all rolling 12-month periods for the market.

“What we’d note, however, is that of the 11 bull markets shown, only two of them came to an end at some point during the 12-month window following day 503, so this period between years two and three of long-lasting bulls has been more of a consolidation phase rather than an endpoint,” Bespoke concluded.

Source: The edge markets

Previously in Q3

It’s a golden age for gold which has been exhibiting an unprecedented performance so far this year, adding another 14% to its value in the third quarter despite global central bank reserves stabilizing, to trade up by 42% year-on-year. That’s even higher than the 32% annual return in the S&P 500.

Fed rate cuts, recession risks in Q4

The final quarter of the year is already underway, and it could be volatile as investors are still missing answers on a couple of topics.

The rate cut story might be a key catalyst for the gold rally. It only took an upbeat jobs report to cast doubt on future rate cut expectations. Investors completely gave up hope for additional 50bps reductions after employment growth rose to a six-month high, the unemployment rate dropped to 4.1% and wage growth accelerated. In addition, they even started to doubt the need for further reductions at the next meeting. Treasury yields surged above 4.0%, a level not seen since July, while gold pulled back only moderately due to the simultaneous escalation of rocket attacks between Israel and Iran.

The services side of the US economy behaves like interest rates are still accommodative. Nevertheless, it is worth mentioning that the unemployment rate is a lagging indicator that confirms changes rather than predicting them. Hence, the improvement in the jobs data should not be taken in earnest. Besides, Thursday’s negative reaction to the latest weekly jobless claims suggested that investors are not convinced that the labor market is on full steam.

All in all, there are still some signs of economic softness which cannot be ignored, including the rising delinquency rates in credit cards and mortgage loans, the contracting ISM manufacturing PMI numbers, and the inverted curve between 3-month and 10-year bond yields, which is not always a reliable indicator but it’s been typically inverted between six months and two years before a recession started. Note that the inversion has been holding for more than a year so far.

Should inflation resume its downtrend, and the labor market starts to show cracks, prompting more rate reductions in the coming months, gold could receive fresh buying interest. Otherwise, a rebound in inflation accompanied by a resilient labor market may delay further rate cuts.

US federal election

The US federal election will be the next hot topic in global markets. Note that the scenario of a second Trump term is not fully priced in yet, with polls showing a marginal advantage of 2-3% for Kamala Harris, which could be easily reversed.

Trump’s presidency could prove inflationary if republicans deliver their promised huge corporate tax reductions through Congress. As global competition for AI heats up, a restrictive stance against China could harm Wall Street, leading traders to seek safety in assets like gold. In this case, bitcoin might restore its connection with the precious metal given Trump’s support to the crypto market.

On the other hand, Harris has little experience with foreign affairs and comes from the pro-trade region of California, creating speculation that she may prevent US-China relations from blowing up. It’s evident that she desires the US to have the leading role in the 21st century and could potentially join the tough-on-China campaign, albeit with a more balanced Biden-like strategy, which may have minimal impact on precious metals.

Geopolitical risk

The geopolitical noise in the Middle East could remain a hot topic in Q4. Israel has provided little information about its retaliation against Iran’s latest massive missile attack, saying that the response “will be lethal, precise and surprising”.

It seems that Hezbollah is in favor of a ceasefire agreement without making it contingent on ending the war in Gaza, but Netanyahu’s unwavering use of force gives little assurance that a deal will be reached soon. Therefore, as long as the tit-for-tat violence continues, things could still go worse even though an attack against Iran’s oil facilities has been put on the sidelines for now and perhaps until the next US president is elected.

Gold’s technical outlook

From a technical perspective, gold’s upward trajectory seems to be well following a bullish 1-5 Elliot wave pattern. The latest pullback in the price could be the wave 4. If the price slips below the $2,600 region, the decline could expand towards the crucial support area of $2,530-$2,550 before the final wave 5 starts.

Alternatively, a bounce back above the 20-day simple moving average (SMA) and the $2,635 area could initially see a test near $2,652. Even higher, the price might print a new record high around $2,700. Then, the door could open for the $2,800-$2,843 area.

Asian shares are poised to follow the lead of another strong performance on Wall Street, with stocks hitting fresh all-time highs. Oil dropped as concerns eased about Israel attacking Iranian energy facilities.

Futures show Tokyo stocks rising more that 1% after resuming trading from a holiday on Monday, while smaller gains are expected in Sydney and Hong Kong. With earnings reports poised to drive US sentiment this week, the S&P 500 rose almost 1%, notching another record — its 46th this year. That’s a hint investors are not deterred by the reduced forecasts for third-quarter results and are instead betting on positive surprises.

Oil dropped almost 3% in early trading Tuesday, after the Washington Post reported that Israel doesn’t plan on striking Iranian oil or nuclear facilities. That extended losses from Monday after China’s highly anticipated Finance Ministry weekend briefing lacked specific new incentives to boost consumption in the world’s biggest crude importer.

The S&P 500 hovered near 5,860 on Monday amid thin trading volume. The Nasdaq 100 added 0.8%. The Dow Jones Industrial Average climbed 0.5%. Nvidia Corp. led gains in megacaps, Apple Inc. gained on a bullish analyst call and Tesla Inc. rebounded after last week’s plunge. Goldman Sachs Group Inc. and Citigroup Inc. advanced ahead of results.

Treasury futures were marginally lower while cash trading was closed for a US holiday. The dollar edged up. Bitcoin jumped 5%.

Strategists are predicting S&P 500 firms will post their weakest results in the past four quarters, with just a 4.3% increase compared with a year ago, Bloomberg Intelligence data show. Meantime, corporate guidance implies a jump of about 16%. That solid outlook suggests companies could easily beat market expectations.

“Wall Street has underestimated Corporate America lately,” said Callie Cox at Ritholtz Wealth Management. “This environment is tough to get a read on, and I don’t blame anybody who’s approaching this rally with a bit of skepticism. We still think the biggest – and most expensive – risk here is to miss a rebound and an eventual rally higher.”

Chinese stocks overcame a bout of early volatility to post their biggest gain in a week on Monday, suggesting that investors are hopeful the government will deliver on its promise of more fiscal support.

Still, there’s more signs of economic weakness as a report Monday showed export growth in September unexpectedly climbed just 2.4% in dollar terms from a year earlier to the lowest level since May. A gauge of US-listed Chinese shares fell more than 2% overnight.

Meanwhile, in a show of hot demand for Japan’s biggest listing in six years, Tokyo Metro Co.’s initial public offering has raised ¥348.6 billion (US$2.3 billion or RM9.9 billion) after the company priced shares at the top of the marketed range, people familiar with the matter said.

In the US, earnings season unofficially kicked off on Friday, led by financial bellwethers JPMorgan Chase & Co. and Wells Fargo & Co. On top of other big banks reporting this week, traders will be paying close attention to results from key companies like Netflix Inc. and JB Hunt Transport Services Inc.

An initial round of third-quarter financial results last week showed Corporate America is benefitting from lower rates early into the Federal Reserve’s easing cycle, according to Bank of America Corp. strategists.

Easing rates pressure was seen in a surge in debt underwriting, mortgage applications and refinancing activity, as well as signs of a bottom in manufacturing, the BofA team including Ohsung Kwon and Savita Subramanian said.

To Solita Marcelli at UBS Global Wealth Management, third-quarter results should confirm that large-cap corporate profit growth is solid against a resilient macro backdrop.

“We maintain our positive outlook for US equities, supported by healthy economic and profit growth, the Fed’s easing cycle, and AI’s growth story,” she said. “While valuations are high, we think they are reasonable against the favorable backdrop.”

Marcelli reiterated her S&P 500 price target of 6,200 by June 2025, and continues to like “AI beneficiaries and quality stocks.”

Source: The edge markets

Korea's import prices fell for a second straight month in September due to a fall in global oil prices and the strengthening Korean won, central bank data showed Tuesday.

The import price index declined 2.2 percent last month from a month earlier following a 3.5 percent on-month fall the previous month, according to the preliminary data from the Bank of Korea (BOK).

From a year earlier, import prices also fell 3.3 percent last month following a 1.8 percent on-year advance the previous month, the data showed.

Import prices are a major factor that determines the path of the country's overall rate of inflation.

The Dubai crude price, Korea's benchmark, stood at $73.52 per barrel in September, down from $77.6 the previous month, according to the central bank.

The Korean won averaged 1,334.82 against the greenback last month, up from 1,354.15 the previous month.

Import prices of raw materials dipped 3.4 percent on-month last month, while those for intermediate goods also declined 2.1 percent over the cited period.

The export price index also fell 2.3 percent last month after a 2.8 percent on-month dip the previous month, according to the data.

Korea's consumer prices slowed to the lowest level in three and a half years in September, falling below 2 percent for the first time since early 2021.

Consumer prices, a key gauge of inflation, rose 1.6 percent on-year last month, compared with a 2 percent increase a month earlier.

September's figure marked the lowest level since February 2021, when consumer prices grew 1.4 percent.

Earlier this month, the BOK cut its key interest rate by a quarter percentage point to 3.25 percent, the first rate reduction in 38 months, as inflation moderated markedly and domestic demand remained sluggish despite still high household debt.

Source: Koreatimes

Tesla (TSLA, 4:10pm ET/9:10pm BST, 23rd October)

Amazon (AMZN, 4pm ET/9pm BST, 24th October)

Alphabet (GOOGL, 4pm ET/8pm GMT, 29th October)

Meta Platforms (30th October, 4:05pm ET/8:50pm GMT, 30th October)

Microsoft (MSFT, 4:10pm ET/8:10pm GMT, 30th October)

Apple (AAPL, 4:30pm ET/8:30pm GMT, 31st October)

Nvidia (NVDA, 4:20pm ET/9:20pm GMT, 27th November)

Nvidia remains a star performer in the equity space, having rallied a whopping 172% YTD, standing as the second best performer in the S&P 500, and the best in the Nasdaq 100, over that time period. The firm also happens to be the second largest stock by weight in each of those indices. Even with considerable time left to run until the earnings release, options price a move of +/-7.7% in the 24 hours following the report, equating to a swing in market cap of around $250bln in either direction. Expectations, for Q3 24, point to adjusted EPS of $0.74, on quarterly revenues just over $33bln.