- European indices erased early losses and finished today's session more than 0.5% higher as weak manufacturing data highlighted a looming global recession, reducing bets on future tightening.
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Credit Suisse pared losses after earlier plunging as much as 10% after the Financial Times reported the Swiss bank’s executives are in talks with its major investors to reassure them amid rising concerns over the Swiss lender’s financial health.
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UK Finance Minister Kwarteng reversed the planned scrapping of the top income tax rate after a public backlash and market turmoil.
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US indices are also trading higher. Dow Jones gains 2.20%, while S&P500 and Nasdaq jumped 2.0% and 1.65% respectively as weak manufacturing data underscored the challenging macro environment while suggesting that tighter financial conditions curbed demand for goods.
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The ISM Manufacturing PMI surprisingly dropped to 50.9 in September, which is the slowest growth in factory activity since the beginning of the pandemic. Also JP Morgan Global Manufacturing PMI pointed to the first contraction in the global manufacturing sector since June 2020.
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WTI oil surged over 5% amid increasing speculation that OPEC+ is considering cutting production of up to 1 million barrels per day at a meeting which will take place on Wednesday.
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Gold rose 1.75% while silver jumped over 8.0% amid weaker dollar and lower yields. Over the past few days, one can also observe an increase in the popularity of the "short squeeze" hashtag regarding silver on Twitter. This is a similar situation to 2021, when investor interest shifted from meme-stocks to the silver market.
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Brazilian Real strengthened over 4.0% against USD as investors welcomed the first-round results of the presidential election. President Jair Bolsonaro’s stronger-than-expected results opened the door for a potential win for the right-wing party, providing continuity for investors. On the other hand, the leftist former President Lula da Silva’s slim lead could force him to pivot toward the center and adopt more market-friendly policies.
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The dollar index weakened below the 112 mark, a level not seen in more than a week, which helped antipodean currencies. Currently AUD and NZD are the best performing major currencies while USD and CHF lag the most.
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Major cryptocurrencies also benefit from the risk-on moods. Bitcoin jumped above $19,500 while Ethereum is trading around $1320.00.
AUDUSD pair rose over 1.6% during today's session, recovering slightly from an over 2-year low around 0.6390, as traders are preparing for the RBA meeting on Oct. 5, where it is expected to lift the interest rates by 50 bp. Markets will be looking for any dovish hints after policymakers said in previous statements that they will be looking for opportunities to slow the pace of rate hikes at some point. Currently the pair is testing an earlier broken lower limit of the wedge formation. Should break higher occur, upward correction may accelerate towards resistance at 0.6717. Source: xStation5
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