Daily Summary: From Panic to Euphoria. The Market Recoups Losses.

USA

• The broad market experienced a very sharp correction at the start of the week, this time upward. Relatively modest gains early in the session quickly escalated. Technology is leading the rally in the US, with Nasdaq 100 futures up more than 3% near the end of the session. The other Wall Street indices are limiting gains to a little above 2%.
• The rebound is not only a sentiment-driven relief move, although that component matters. Despite ongoing risk in the Middle East region, many market participants appear to be leaning toward a de-escalation scenario. This is suggested not only by selected comments from politics and diplomacy, but also by oil pricing.
• Sentiment also appears to be improving toward many stocks that were battered by recent pullbacks. CoreWeave, Cisco, and Applied Materials will report results this week. All key companies in the sector are posting significant gains ahead of earnings calls.
• A key source of pressure and a negative factor for the sector has become Nvidia CEO Jensen Huang. The CEO admitted to an affair with a person suspected of cooperating with Chinese intelligence. The development is being closely watched by the media and regulators, but for now the number of solid conclusions remains limited.

Company news, USA:

• Nvidia (NVDA.US): The stock is down about 5% after the supervisory board launched an investigation into CEO Jensen Huang in connection with his relationship with a woman suspected of Chinese espionage. Despite declarations that no trade secrets were leaked, the scandal undermines sentiment toward the AI sector just eight days before the quarterly report.
• KKR & Co. (KKR.US): Shares are up about 2% after Q3 results beat Wall Street analyst expectations. Excellent performance in the long-term private equity investment segment managed to offset weaker profitability in the Global Atlantic insurance arm.
• Coinbase (COIN.US): The company received approval to establish a licensed trust bank charter.
• Constellation Energy (CEG.US): The stock is up nearly 10% after the company raised its full-year forecast for adjusted operating earnings per share. The power producer benefits from continued structural demand from energy-intensive data centers. Bloom Energy is also benefiting, rising 13%.

Macro data, USA

• Expectations for this week’s CPI release point to an increase in the pace of price growth to 3.9%.
• Wholesale sales accelerated from 1.8% to 2.8%.
• After last week’s NFP release, the market appears to be pricing in roughly an 80% probability of a Fed rate hike at the December meeting.

Europe

• European assets are also benefiting from the shift in sentiment and falling energy prices. Futures on the main pan-European index are up more than 2.7%. Today’s leader in Europe is Italy’s ITA40, up more than 3%. It is followed by Germany’s DE40 and Spain’s SPA35, both up around 2.5%.
• By sector, banks are performing best, as a consequence of the proposed merger between a Crédit Agricole subsidiary and Banco BPM. Defense stocks are also doing well, supported by improved sentiment and fundamental news such as new orders.

Company news, Europe

• UniCredit SpA (UCG.IT): Shares of the Italian bank are surging, driven by excellent quarterly results, a raise of the full-year net profit target to above EUR 11.5 billion, and the announcement of an interim dividend in an impressive amount of EUR 3 per share. The price is up about 6%.
• Argenx SE (ARGX.BE): The biotech company’s shares are rising in response to the acquisition of US firm Unnatural Products for up to USD 1.15 billion, significantly strengthening its peptide drug development platform. The stock is up more than 4%.
• Infineon Technologies AG (IFX.DE): Shares of the chipmaker are gaining on the rebound in sentiment in the European semiconductor sector and an inflow of orders for power components for AI data center infrastructure. Shares are up more than 6%.
• LVMH Moët Hennessy Louis Vuitton (MC.FR): The company leads declines, remaining under pressure from concerns about weakening consumer demand in China and cautious prospects for the entire luxury goods segment. The stock is down about 1.5%.

Macroeconomic data, Europe

• Germany’s trade balance deteriorated far more than the market expected. Germany’s surplus fell to EUR 15.6 billion in October. This happened even though exports rose four times more than the market expected.
• The Sentix index rose above expectations, reaching 2.4.

Forex

• In FX markets, the leaders in volatility are NZD, AUD, and the euro. The New Zealand dollar is up more than 1% against the major currency pairs. The currency is gaining on election uncertainty in New Zealand.
• The AUD and the euro are strengthening on the back of US dollar weakness, while the AUD is additionally supported by moderately positive macro readings from China.

Commodities

• Oil and European gas are posting significant declines (4% and more than 5%), mainly triggered by diplomatic communication between the US, Iran, and Gulf countries. The market is pricing in another chance for an agreement and de-escalation.
• US natural gas is posting strong gains of as much as 7%, driven by weather forecasts that are turning out colder than previously expected.
• A moderate rise can be seen in metals prices, both precious and industrial, with gains limited to around 1.5%.
• Coffee futures are down about 3%. This is the result of forecasts for heavier-than-expected rainfall in Brazil.

Cryptocurrencies

• Rising risk appetite is showing up as moderate gains in the cryptocurrency market, though the main tokens are being left out.
  • Bitcoin is unchanged, holding around USD 74,340.
  • Ethereum is down about 0.3%, hovering around USD 2,110.
  • Solana is up about 0.2%, reaching USD 86.