Economy

1. Futures mixedUS stock futures hovered around both sides of the flatline on Monday as investors looked ahead to a parade of corporate earnings reports this week.By 03:26 ET (07:26 GMT), the Dow futures contract had edged up by 47 points or 0.1%, S&P 500 futures were mostly unchanged, and Nasdaq 100 futures had slipped by 33 points or 0.2%.The main indices on Wall Street notched a sixth consecutive weekly gain last week, with the 30-stock Dow Jones Industrial Average and benchmark S&P 500 in particular logging fresh record closing highs on Friday.Sentiment was bolstered by a surge in shares in streaming giant Netflix (NASDAQ:NFLX), which posted better-than-anticipated subscriber growth and an optimistic outlook for the rest of its fiscal year. Apple (NASDAQ:AAPL) also advanced on data showing an uptick in new sales of its flagship iPhone smartphone in key market China, while Nvidia (NASDAQ:NVDA) inched higher after analysts at Bank of America Global Research upgraded their price target of the artificial intelligence-darling’s stock.A batch of broadly solid results from major companies has combined with positive US economic data to fuel a jump in stocks in recent days, although uncertainty still looms in the form of elevated stock valuations and the outcome of the all-important US presidential election in November.2. Major earnings aheadWith earnings season kicking into high gear, Tesla (NASDAQ:TSLA) will be one of the first big US tech companies to report, with results due after the close of trade on Wednesday.Tesla shares have taken a hit this month following the unveiling of its long-awaited robotaxi offering, which some investors viewed as lacking in concrete details. Year-to-date, Tesla shares have underperformed the S&P 500, losing around 11% compared to the broader index’s 22.5% gain.Results are also due out from semiconductor firm Texas Instruments and wafer-fabrication equipment group Lam Research (NASDAQ:LRCX) following a volatile week for the chipmaking industry.Shares in the sector slumped last Tuesday after ASML (AS:ASML), Europe’s biggest tech firm, projected lower-than-expected 2025 sales and bookings. But the segment rebounded on Thursday on a forecast-topping spike in quarterly profit from the world’s largest contract chipmaker and a major producer of advanced chips used in AI applications, Taiwan Semiconductor Manufacturing Co. (NYSE:TSM).3. Starboard takes stake in Kenvue – reportsActivist investor Starboard Value has taken a stake in Kenvue, the consumer products firm behind brands like Band-Aid and Listerine which went public last year, according to various media reports.The exact size of the stake has yet to be revealed, the reports said.Kenvue, which was spun off from Johnson & Johnson, currently has a market capitalization of around $41.6 billion. Its shares have fallen by 18% since they were publicly listed in May 2023, and have lagged the wider S&P 500.Citing a source familiar with the matter, Reuters reported that Starboard could be aiming to review how Kenvue markets and prices its brands. The hedge fund’s Chief Investment Officer Jeffrey Smith is due to present investment ideas at the 13D Monitor Active-Passive Investor Summit later this week.The Wall Street Journal was the first to report on the story.4. PBOC slashes lending ratesThe People’s Bank of China cut its benchmark loan prime rate (LPR) by 25 basis points on Monday, in the latest move by Beijing to reinvigorate activity in the world’s second-largest economy.The PBOC reduced its one-year LPR to 3.10% from 3.35%, while the five-year LPR — a key factor in determining mortgage rates — was lowered to 3.60% from 3.85%. The PBOC last cut rates in July.Chinese authorities had largely telegraphed the decision, with PBOC Governor Pan Gongsheng previously predicting that the LPR rates would be cut by between 20 and 25 basis points.The past month has seen Beijing unveil a raft measures aimed at reigniting growth, although a perceived lack of details on their implementation, timing and scale has inspired tepid investor confidence.5. Oil steadies after weekly declineOil prices edged higher Monday, stabilizing after the previous week’s sharp losses on worries about global demand growth, particularly in top crude importer China.By 03:27 ET, the Brent contract climbed 0.6% to $73.50 per barrel, while U.S. crude futures (WTI) traded 0.8% higher at $69.23 per barrel.Brent had settled down more than 7% lower last week, while WTI lost around 8% after data showed that China’s economy grew at the slowest pace since early 2023 in the third quarter.However, sentiment was somewhat lifted on Monday after the Chinese central bank cut benchmark lending rates.Meanwhile, tensions in the Middle East remain in focus, as Israel continues its campaigns against both Hamas and Hezbollah, while also potentially preparing to retaliate against Iran for an early-October strike. More

Here’s your look at what matters for markets this week from Kevin Buckland in Tokyo, Ira Iosebashvili in New York, and Naomi Rovnick, Dhara Ranasinghe and Karin Strohecker in London.1/ ELECTRIC DREAMSAs the latest earnings season goes full steam, focus is on Tesla, one of the first of big U.S. tech companies to report. Tesla shares have taken a hit this month, following a long-awaited unveiling of its robotaxis that some investors said was short on practical details. Year-to-date, Tesla’s shares have lost around 11%, compared to the S&P 500’s 22.5% gain.A weaker-than-expected Tesla earnings in late July, along with underwhelming results from Google-parent Alphabet (NASDAQ:GOOGL), sparked a U.S. stocks selloff that was a prelude to the steeper drop in early August. Though investors are more optimistic about the U.S. economy after a blowout jobs report and last month’s 50 bps rate cut from the Federal Reserve, a soft earnings report from Tesla on Oct. 23 could reignite worries about tech stock valuations, which have climbed along with the broader indexes.2/ FAR AWAYFinance officials head to Washington DC for the annual meeting of the International Monetary Fund and World Bank Group from Monday to debate how countries can navigate slowing growth and ever-rising debt.Some 5,000 miles east, in the Russian city of Kazan, President Vladimir Putin hosts a summit of BRICS leaders, seeking support in his standoff with the West. Russia says leaders from Brazil, India, China, South Africa, Egypt, the UAE and Saudi Arabia, which account for a third of global economic output, will be there. Key topics include a push to end U.S. dollar dominance. By then, there will be just days to go to the biggest political risk event of 2024: a U.S. election that is too close to call and one that could mark the start of a new global trade war if Donald Trump wins – a prospect seen as damaging to economies everywhere.3/ THINGS CAN ONLY GET BETTERWhen September business activity data were released a month ago, investors got a shock from news of a sharp euro zone contraction and ramped up ECB rate cut bets.So October PMIs on Thursday will likely be scrutinised for a sense of how rapidly rates have further to fall. PMI data from other economies are published the same day.Note, the final euro zone Sept purchasing managers index, while below the 50 mark that divides contraction from expansion, was not as dire as the initial estimate.And other data suggest tentative reasons for optimism in a bloc that has skirted recession for over a year. Q3 lending demand rose; German sentiment has improved.But tell that to the euro. It will lag as long as investors reckon the ECB will ease policy at a faster pace than the Fed. 4/ PROOFChinese stocks have been a near-perfect barometer of expectations for big bang stimulus from Beijing, and just a glance at a chart of the past two months shows how quickly hopes have been deflated.On Monday, China cut rates– as expected. Since the announcement of the biggest and broadest stimulus since the pandemic in late September, one highly anticipated briefing after another has passed without the details investors are craving – particularly the size of fiscal spending.Just how powerful the fine print can be was shown Friday, when the launch of promised swap and relending schemes sparked a stocks surge. But with further stimulus clarity not expected in any major capacity before a meeting of parliament’s standing committee, probably early next month, that leaves a weeks-long void when stoking the equity rally looks a very big ask. 5/ MONEY, MONEY, MONEYThe UK’s new Labour government presents its first budget on Oct. 30 and with the nation’s finances strained and growth stalling, investors will scrutinise fresh monthly government borrowing data this week. Public sector net debt has hit 100% of economic output and government borrowing in August, at 13.73 billion pounds, 3 billion pounds above economists’ forecasts. September’s borrowing amount will be revealed on Oct. 22. After finance minister Rachel Reeves identified a fiscal “black hole” worth 22 billion pounds, but ruled out raising taxes on working people, stock market investors suspect they are in the firing line from potential hikes to capital gains taxes. Bond market lenders are also, according to BNY, selling gilts at the fastest pace since former Prime Minister Liz Truss’ chaotic 2022 mini-budget, as speculation mounts about the UK increasing debt issuance to fund public investment. More

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The PBOC cut its one-year LPR to 3.10% from 3.35%, slightly more than expectations it would cut the rate to 3.15%. The five-year LPR, which determines mortgage rates, was cut to 3.60% from 3.85%, against expectations for a cut to 3.65%. The PBOC had last cut rates in July. The LPR is determined by the PBOC based on considerations from 18 designated commercial banks, and is used as a benchmark for lending rates in the country.The rate cut was largely telegraphed by Chinese authorities, and is the latest in a line of sweeping stimulus measures aimed at shoring up economic growth. Beijing had over the past month flagged several monetary and fiscal measures aimed at supporting infrastructure development, stemming a property market decline and keeping economic growth on track to meet the government’s 5% annual target. The government had promised interest rate cuts as part of these measures, making Monday’s cut somewhat expected.The past month saw Beijing unveil its most targeted measures yet at supporting growth. But the measures inspired middling investor confidence, given that Beijing did not provide details on the implementation, timing and scale of the planned measures. The PBOC has also consistently cut the LPR over the past two years, to limited effect. Looser monetary conditions have so far done little to offset a persistent deflationary trend in the country, with recent readings for September showing little improvement.  More

Election polls show rising odds of former President Donald Trump winning the Nov. 5 election and are boosting the dollar, since his proposed tariff and tax policies are seen as likely to keep U.S. interest rates high and undermine currencies of trading partners.Currency moves in major markets last week were driven by the European Central Bank’s dovish rate cut and strong U.S. data that pushed out expectations for how fast U.S. rates can fall, particularly if Trump wins the presidency.The yen was down 0.1% at 149.32 per dollar, staying on the stronger side of 150 per dollar, having breached that level briefly last week for the first time since early August.The dollar index measure against major rivals was at 103.45. It fell 0.3% on Friday as risk appetite picked up broadly across markets after China announced more details of its broad stimulus package, but logged 0.55% gains for the week. The euro stood flat at $1.0866 and sterling was also flat around $1.3045.Bitcoin got a lift from Trump’s improving prospects since his administration is seen as taking a softer line on cryptocurrency regulation. It was last up 0.8% at $69,400, and has risen 18% since Oct. 10.With no major economic events due this week, market focus will be on corporate earnings and U.S. election risk, and possibly a rise in costs to hedge dollar and other portfolio risks, Chris Weston, head of research at Australian online broker Pepperstone, said in a note.”With just 15 days to go until the U.S. election, traders need to decide if now is the right time to start placing election trades with greater conviction,” Weston said.The clearest way to express the Trump tariff risk was to be long dollars versus the euro, Swiss franc and Mexican peso, he said.Brad Bechtel, global head of FX at Jefferies, also noted that rising real interest rates were helping the dollar along, particularly against those three currencies.”We expect this trend to continue straight into the election and if Trump wins, likely well after the election as well,” Bechtel wrote.Last week, the yen fell 0.3%, the euro 0.6%, sterling was flat and the dollar index climbed 0.55%. The Mexican peso fell 3%.The euro is down more than 3% in three weeks and has fallen through its 200-day moving average, and is parked near a 2-1/2 month low. More

BRASILIA (Reuters) -Brazilian President Luiz Inacio Lula da Silva on Sunday canceled his trip to Russia for the BRICS summit, following medical advice to temporarily avoid long-haul flights after a head injury at home that caused a minor brain hemorrhage.In a statement, the presidential office said Lula, 78, will now participate in the BRICS meeting via videoconference. He was initially scheduled to depart at 5 p.m. on Sunday.Lula’s doctor, Roberto Kalil, said in an interview with GloboNews TV channel that the president suffered a fall that caused “great” trauma to the back of his head, requiring stitches for the injury and resulting in a “small brain hemorrhage” in the temporal-frontal region.”It’s a condition that will require repeat tests throughout the week. Any brain hemorrhage, theoretically, can worsen in the following days, so observation is important,” he said.Kalil added that Lula is doing well and can engage in normal activities. According to a medical report issued earlier on Sunday by the Sirio Libanes Hospital in Brasilia, Lula suffered a laceration to the “occipital region” in the back of his head on Saturday.The report said Lula “was advised to avoid long-distance air travel but is otherwise able to carry out his regular duties.”The government said in a post on X that Foreign Minister Mauro Vieira has been designated to lead the Brazilian delegation in the BRICS summit, departing later on Sunday. The diplomatic forum founded 15 years ago by major emerging markets Brazil, Russia, India, China has since expanding to include South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates.Congresswoman Gleisi Hoffmann, president of Lula’s Workers Party, posted on social media that she had spoken with the president and that “he is doing very well, just avoiding a long trip.” More

Asking prices rose by just 0.3% in October, well below their average for a 1.3% monthly increase for the month, property website Rightmove (OTC:RTMVY) said. The number of homes available for sale was 12% higher than the same time period last year, and was the highest per real estate agent since 2014.Overall activity in the property market remained strong, with buyer demand rising. Prices were 1.0% higher than a year earlier.Tim Bannister, Rightmove’s director of property science, said some buyers were waiting for a further reduction in borrowing costs by the Bank of England as well as the government’s budget later this month. “Despite a budget-shaped cloud on the horizon, the big picture still looks positive for the market heading into 2025. Market activity remains strong, despite affordability pressures on movers,” Bannister said. “Once we have more certainty about the contents of the budget, hopefully followed by speedy second and third Bank Rate cuts, we could see another surge in market optimism like we had in the summer.”Monday’s figures chimed with other indicators of Britain’s housing sector that have shown momentum picking up. Mortgage lenders Halifax and Nationwide both reported rises in house prices in September.Britain’s finance minister Rachel Reeves will deliver her first budget on Oct. 30. Reeves has warned some taxes will have to increase, although she has said that Prime Minister Keir Starmer’s government would not raise taxes on “working people”. The Times reported last week that Reeves will not extend an increase in the thresholds at which people start paying stamp duty on home purchases beyond its scheduled expiry in March. The BoE is expected to cut its benchmark Bank Rate at its next meeting in November and possibly again in December. Rightmove said a fall in mortgage rates was stalling after dropping quickly when the BoE cut borrowing costs for the first time in more than four years in August.It said average 5-year fixed mortgage rates rose to 4.61% from 4.55% a week earlier, the first weekly increase since May. More