Financial breakfast on October 20th: Gold price under pressure, oil price hits new high for the month

On Tuesday (October 20th Beijing time), in the morning session of the Asian market, according toDBG ForexMarket observation shows that spot gold trading is around $4135.69 per ounce, with gold prices being suppressed by the strengthening of the US dollar and high US Treasury yields. Investors are waiting for the Federal Reserve to announce its interest rate decision next week, and it is expected that decision-makers will keep interest rates unchanged; US crude oil traded around $98.27 per barrel, with oil prices hitting a one month high on Monday. The market is concerned about the pace of diesel supply and changes in energy supply and demand.

Focus on the day

stock market

According to the US stock data tracked by DBG foreign exchange, the US stock market rose on Monday. The S&P 500 rose 0.41% to 7690.73, the Nasdaq rose 1.11% to 26430.89, and the Dow fell 0.07% to 51966.03. The rise was largely driven by heavyweight stocks. The main stock indexes fell back from daily highs. The oil price fluctuation weakened some of the support previously provided by the energy market. Investors returned to chips and other AI related stocks after concentrated adjustment last week, while waiting for the release of key corporate financial reports.

The market is concerned that rising interest rates may suppress investment in artificial intelligence infrastructure, and is increasingly concerned about how expensive AI development can be financed. The Philadelphia Semiconductor Index closed up 1.6% on Monday, ending an eight day losing streak. Previously, it had fallen about 15.7%, setting a record for the longest losing streak since October 2008.

Rosenblatt's Michael James stated that the semiconductor sector is approaching a temporary low, with no new bad news over the weekend, cautious sentiment, and significant oversold, resulting in a rebound. However, with a large number of technology companies about to release their financial reports, the market still faces uncertainty.

Seven out of the eleven major sectors of the S&P 500 closed down, with the non essential consumer goods sector showing the strongest performance with a 2.7% increase, the technology sector up 1.2%, the public utilities sector down 2%, and the real estate sector leading the decline with a 1.2% decrease; Morgan Stanley listed Amazon as its "preferred stock" and it closed up 5%, Tesla rose 3.8%, CoreWeave fell significantly by more than 25% last week due to concerns over $50 billion in debt. Although it was raised to "buy" by Goldman Sachs, it closed down 0.4%, and Intel rose 2.4% after being raised to "neutral" by JPMorgan Chase. Additionally, Monday marks the 39th anniversary of Black Monday.

Jin Shi

Spot gold fell 0.59% on Monday, closing at $4140.64 per ounce, as investors waited for the Federal Reserve to announce its interest rate decision next week and expected policymakers to keep interest rates unchanged due to the strengthening of the US dollar and high US Treasury yields.

DBG forex observers say that the market is concerned that central banks around the world will have to further tighten policies to control inflation, which will bring new upward momentum to yields. As yields continue to remain high, gold investors are weighing whether it is wiser to hold bonds at present; The key is not only whether the Federal Reserve takes action next week, but also the tone of its policy guidance. Tight information may lead to further weakness in gold prices in the short term, "the person added.

According to the Chicago Mercantile Exchange's FedWatch tool, which is closely monitored by DBG Forex, traders believe that the likelihood of the Federal Reserve keeping interest rates unchanged in October is 82.8%, and the likelihood of taking action in December remains at 90%; Gold is often seen as a tool to hedge against inflation, but rising interest rates will weaken the attractiveness of this non yielding asset, and investors are still waiting for the release of US personal consumption expenditure (PCE) data next week. Olay Hansen, head of commodity strategy at Shengbao Bank, stated that the key resistance level remains at $4235, while support continues to form below $4100.

oil market

According to the DBG foreign exchange market, oil prices hit a one month high on Monday, with US crude oil closing down 0.81% at $98.24 per barrel, but hitting a one month high of $99.71 per barrel during trading; Brent crude oil fell 0.43% to close at $109.19/barrel, hitting a one month high of $110.66/barrel during trading, as market attention to changes in energy supply has increased.

Market analysis firm Kpler stated that the pace of energy transportation and supply has received attention recently, and there have been changes in the flow of related crude oil; In addition, the survey shows that OPEC crude oil production increased in September, with the main driving force being the increase in production by major oil producing countries.

currency market

DBGforeign exchange marketObservation shows that the US dollar index remained stable around 102 on Monday, with artificial intelligence related stocks rebounding from a significant correction last week to boost the US dollar. Last week, the market was concerned that a decrease in investor enthusiasm for AI stocks would hinder capital inflows and reduce demand for the US dollar, putting pressure on the US dollar. Francesco Pesole, foreign exchange strategist at Dutch International Group, said that the market seems to have formed a clear reaction pattern: even if inflation remains high, stock market volatility is enough to significantly weaken expectations of further tightening policy by the Federal Reserve. This logic may be related to the stock market wealth effect, which many believe supports the resilience of the US economy. This is enough to indicate that if stock market volatility originates from the fields of technology and artificial intelligence, the US dollar will no longer be the preferred safe haven currency, and may even lag behind many other G10 currencies.

Recent statements from Federal Reserve officials, including statements from Federal Reserve Chairman Walsh, indicate that policymakers are not in a hurry to act again. Walsh was optimistic about the strong performance of the US economy last Friday, but did not imply whether further action is needed or when it may take place; The federal funds rate futures trader monitored by DBG Forex expects the Federal Reserve to maintain interest rates unchanged at its meeting on October 27-28, and sees a 91% chance of action in December.

The euro fell 0.24% against the US dollar, closing at 1.1211, as the market focused on France's fiscal prospects, while artificial intelligence stocks rebounded to boost the US dollar.

The yield spread between French government bonds and safe haven German bonds has widened to 147 basis points, reaching the level of 2011-2012, and was about 110 basis points at the end of September.

Canada's annual inflation rate rose to 3.1% in September, slightly lower than economists' expectations, and the Canadian dollar subsequently gave up some of its gains. However, the Governor of the Bank of Canada, MacLehose, made tight remarks on Saturday to maintain the strength of the Canadian dollar. He stated that due to the continued high prices of crude oil and petroleum products, the central bank expects to significantly raise its quarterly inflation forecast in October, and the Canadian dollar rose 0.27% against the US dollar to 1.41 Canadian dollars.

The Japanese yen fell 0.35% against the US dollar to 158.49 yen. Bank of Japan Governor Kazuo Ueda stated on Monday that the core inflation rate is "very close" to the central bank's 2% target, as strong global demand for artificial intelligence intensifies inflationary pressures caused by tight labor markets, suggesting that there is still room for further adjustment.

International News

US Energy Secretary Wright: Diesel market supply still needs to be observed

US Energy Secretary Wright said that the pace of diesel market supply still needs to be observed. Wright stated that it remains to be seen whether diesel will be further released into the market, and the United States hopes that the relevant supply can remain stable; To enable and sustain the export of diesel, relevant conditions still need to be improved.

Cuba's new oil and gas regulations officially come into effect, expanding the participation of private enterprises and foreign investors

On October 19th local time, new regulations for the oil and gas industry in Cuba officially came into effect, further expanding the scope of participation of domestic private enterprises and foreign investors in the oil and gas industry, and providing legal basis for expanding oil and gas resource development. The new regulations include the Cuban Oil and Gas Law No. 135 and its accompanying Implementing Law No. 184, which were announced in the Cuban Official Gazette on October 12th. According to the new regulations, Cuba has further relaxed access restrictions for the oil and gas industry, allowing eligible domestic and foreign enterprises and individuals to participate in activities such as exploration, extraction, refining, transportation, storage, and sales of oil and gas. However, relevant business activities still need to obtain licenses in accordance with the law. The underground oil and gas resources in Cuba continue to be owned by the public, and the state reserves the right of first refusal to purchase oil and gas needed to ensure energy security.

The New York Stock Exchange extends some options trading hours involving securities such as Nvidia and Alibaba

The New York Stock Exchange (NYSE) has extended the trading hours for some NYSE American options. The first batch of eligible underlying securities include the State Street SPDR S&P 500 ETF Trust, iShares Anshuo Russell 2000 ETF, SPDR Gold Trust, as well as Apple, Microsoft, Nvidia, Alibaba, TSMC Alphabet、 Amazon, Oracle, etc. The morning trading session is from 7:30am to 9:25am Eastern Time, and the evening trading session is from 4:00pm to 4:15pm Eastern Time. The New York Stock Exchange plans to expand similar extended trading hours arrangements to stock trading in December. Kevin Tyrrell, Chief Product Officer of the New York Stock Exchange, said, "Extending the options trading session reflects market demand, allowing investors to seize investment opportunities over a longer period of time and engage in reliable risk management

The probability of the Federal Reserve keeping interest rates unchanged in October is 82.8%, and the probability of at least one action within the year is 93.6%

According to CME's "Federal Reserve Watch", the probability of the Federal Reserve keeping interest rates unchanged until October is 82.8%, and the probability of a cumulative increase of 25 basis points is 17.2%. The probability of the Federal Reserve keeping interest rates unchanged until December is 6.4%, the probability of a cumulative increase of 25 basis points is 77.8%, and the probability of a cumulative increase of 50 basis points is 15.8%.

Domestic News

High speed optical module component orders are scheduled to increase the value of a piece of glass by over 60 times by the end of 2027

At an optical components company in Nanchang, Jiangxi, a seemingly inconspicuous piece of glass is entering the high-speed optical communication market with the increasing demand for AI computing power. From 2.5G PON filters in fiber optic households to 1.6T optical module products, after 11 years of development, the value has increased from one cent to over 60 times its original value. With the rapid construction of AI big models and computing power centers, high-precision coating products of 5 nanometers and 10 nanometers have ushered in a broad market. Now, the traditional imaging and optical communication business ratio of this enterprise has been optimized from 8:2 to 5:5. In the first half of this year, the revenue of the communication optics business increased by 118.25%, almost half a year ahead of last year's full year profit. Their high-speed optical module component orders have been scheduled until the end of 2027.

The total import and export volume of goods in the first three quarters of this year increased by 18.8% year-on-year

On October 19th, the National Bureau of Statistics released economic data for the first three quarters of this year. In the first three quarters, the total import and export volume of goods was 3.99399 trillion yuan, a year-on-year increase of 18.8%. Among them, exports amounted to 2319.79 billion yuan, an increase of 16.4%; Imports amounted to 1.6742 trillion yuan, an increase of 22.3%. The import and export of some trading partners increased by 17.1%. The import and export of private enterprises increased by 19.1%, accounting for 56.9% of the total import and export volume. The export of electromechanical products increased by 23.7%, accounting for 64.3% of the total export value. In September, the total import and export volume was 5162.8 billion yuan, a year-on-year increase of 27.5%, which was 7.7 percentage points faster than the previous month. Among them, exports amounted to 3034.4 billion yuan, an increase of 29.6%; Imports amounted to 2128.4 billion yuan, an increase of 24.6%.