Global Markets

  • In the United States, futures point lower as investors continue to digest more corporate earnings. The S&P 500 and the Nasdaq 100 fell by 0.36% and 0.41% respectively.
  • In Europe, the FTSE 100 fell as Rachel Reeves takes the spotlight. FTSE 100 declined by 0.54% while the Stoxx 600 fell by 0.50%
  • In Asia, Japan's Nikkei 225 underperformed, ending the day lower by 1.60% while Hong Kong's Hang Seng stabilized and posted soft gains of 0.10%. CSI 300 outperformed Hong Kong, closing the day higher by 0.57%.

Macroeconomics

  • UK Chancellor Rachel Reeves plans to raise taxes on e-commerce giants like Amazon to support high street shops in her upcoming budget. She aims to reform the business rates system, which currently disadvantages physical retailers. Reeves seeks to balance taxes between online firms and high street businesses, possibly reducing rates for shops, leisure, and hospitality sectors. While she won’t extend the current 75% relief for hospitality, broader reforms are expected next year. An online sales tax is unlikely, but changes to how warehouse taxes are calculated are under consideration.
  • Bangladesh's central bank raised its key policy rate for the fifth time in 2024, increasing the repurchase rate by 50 basis points to 10%, effective October 27, to combat persistently high inflation. Despite inflation easing slightly to 9.9% in September, food prices remain above 10%. The central bank also raised the standing lending rate to 11.5% and the deposit rate to 8.5%. Inflation, driven by high food and energy costs and a depreciating currency, averaged 9.7% this fiscal year. The rate hikes follow the removal of a lending rate cap in May to improve monetary policy transmission.
  • Chinese companies saw the largest monthly capital inflow in nearly two years last month, as they moved money back into the domestic market following US rate cuts that reduced returns on dollar assets. This shift reversed previous large purchases of US dollars and other currencies, signaling growing confidence in the yuan’s stability. The offshore yuan briefly strengthened past the 7-per-dollar mark after the People’s Bank of China introduced economic support measures. However, the yuan has since weakened amid concerns over slower Fed rate cuts and US election uncertainties, with analysts cautious about whether the positive trend will continue.
  • Russia's role in the European Union's liquefied natural gas (LNG) market has grown, with its share rising to 20% in the first half of 2024, up from 14% a year earlier. Despite efforts to reduce reliance on Russian energy after the invasion of Ukraine, Russian LNG remains crucial to Europe's energy security as pipeline supplies have diminished. The EU's overall LNG imports fell to their lowest since 2021, with Russia's share increasing amid reduced imports from Qatar, which has shifted its focus to Asia. As the bloc looks to phase out Russian gas, it is grappling with how to replace supplies, especially as a key transit agreement with Ukraine is set to expire.

International Relations

  • China and India announced a deal to resolve their enduring border issues ahead of the BRICS summit. Both couuntries have agreed to a pact on military patrols along the disputed border in the Himalayas. Although actual details were not released, the agreement revolves around on the patrolling arrangement in the India-China border.
  • China's consulate in Mandalay, Myanmar was struck by an explosive device. China has been balancing its support for the military regime with its relations with ethnic armed groups in the border areas. The recent attack highlights the growing tensions between the junta and the ethnic groups, as well as China's dilemma in navigating the situation.
  • The US is in talks with Southeast Asian nations, including the Philippines, Singapore, and Thailand, about deploying small modular nuclear reactors (SMRs) to meet rising energy demands and reduce reliance on fossil fuels. Andrew Light, the US assistant secretary of energy, discussed SMRs at the Singapore International Energy Week conference, highlighting their potential benefits, such as faster and cheaper construction compared to traditional nuclear reactors. Southeast Asian countries like the Philippines aim to have nuclear power by 2032, while Vietnam and Indonesia are also considering the technology. SMRs are still in development and have not yet been deployed commercially at scale.

Other Notable News

  • In the US, Kamala Harris holds a narrow lead over Donald Trump according to recent polls and surveys, with younger Americans strongly supporting Harris. Former Republican stalwart Liz Cheney has predicted that millions of Republicans may vote for Harris, while Trump continues to court Christian voters.
  • ASML CEO Christophe Fouquet expects increasing US pressure to restrict sales of semiconductor technology to China, ASML’s largest market. Speaking at the Bloomberg Tech Summit, Fouquet noted that while much of ASML's China business involves mature technology unrelated to national security, geopolitical tensions could push for tighter restrictions. The Dutch government faces a dilemma between its US alliance and China's importance as a market. ASML, which holds a monopoly on advanced lithography machines, has already been barred from selling its most advanced equipment to China. Sales to China, currently elevated, are expected to shrink next year.

Disclaimer: All information provided is intended solely for general informational purposes. Seven Insights does not take into account individual financial goals or situations and does not provide personalized investment advice. Seven Insights is not a licensed securities dealer, broker, U.S. investment adviser, or investment bank.