【True Burning Finance】Japan's Liberal Democratic Party suffers setbacks, dragging down the yen; the National People's Congress meeting will be held next week, and details of fiscal policy will be announced.
Japan's ruling coalition, the Liberal Democratic Party, lost its majority in the House of Representatives for the first time since 2009, indicating the lingering impact of political donation scandals. The risk of political turmoil dragged the yen to a near three-month low in early Asian trading.
Overnight Highlights
·Most U.S. stocks closed lower on Friday, but the Nasdaq rose driven by mega-cap stocks as major companies prepare to release quarterly earnings in the coming week. U.S. Treasury yields rose as investors awaited employment data for new clues on the Federal Reserve's rate-cut path. The dollar index rose, marking its fourth consecutive weekly gain, as recent data tempered expectations for Fed rate cuts. Gold prices edged higher, recovering from a wave of profit-taking, supported by Middle East tensions and U.S. election uncertainties. Oil prices closed higher, up 4% for the week.
International News
·Japan's ruling coalition, the Liberal Democratic Party, lost its majority in the House of Representatives for the first time since 2009, indicating the lingering impact of political donation scandals. The risk of political turmoil dragged the yen to a near three-month low in early Asian trading.
·The University of Michigan's October consumer sentiment index rose to a six-month high, influenced by rate-cut expectations and the U.S. election.
·ECB President Christine Lagarde reiterated that inflation is declining smoothly but warned that risks from wage pressures remain. Bundesbank President Joachim Nagel said the eurozone may achieve its 2% inflation target earlier than expected. An ECB survey showed consumer inflation expectations continued to decline in September. Germany's Ifo business expectations index rose to its highest level since June. See: [Market Review] ECB Cuts Rates as Expected—What’s Next for the Euro?
·Renowned economist Mohamed El-Erian said gold's record highs reflect global financial institutions diversifying away from the U.S. dollar.
·Israel conducted limited strikes on Iranian military targets on Saturday, while Tehran downplayed the impact, suggesting it may not retaliate. The restrained stance from both sides could help advance regional agreements. Brent crude plunged over 5% in early Asian trading.
Greater China News
·China's Vice Finance Minister Liao Min said recent stimulus measures aim to boost domestic demand and achieve annual growth targets, with fiscal policy details to be announced after the National People's Congress Standing Committee meeting. According to Xinhua, the committee will meet from November 4-8 to review a State Council report on financial work. AIIB President Jin Liqun expressed confidence in China's stimulus measures but cautioned that effects may not be immediate. See: [Market Review] Accelerated Implementation of Property Policy Measures
·China's September industrial profits fell 27.1% year-on-year due to deflation, accelerating from August's decline.
·Goldman Sachs: If the U.S. imposes additional tariffs on China post-election, China may use tools including yuan depreciation.
·The EU said significant gaps remain in EV tariff talks with China. China's Commerce Ministry agreed to immediate next-phase talks and welcomed an EU delegation to Beijing.
·TSMC (TSM.US) founder Morris Chang said globalization in semiconductors, especially advanced chips, is dead, and free trade is dead. In this environment, TSMC's challenge is to continue growing. The Information reported TSMC halted shipments to Chinese crypto mogul Jian Ke Tuan's Xiamen SuanNeng Technology earlier this month, citing similarities between its chips and Huawei's AI chips. See: [Market Review] TSMC (TSM.US / 2330.TT): Major Client Uncertainty Fades, Upgrade to Buy
·Mercedes-Benz plans cost cuts after weak China demand hurt profits, while Porsche is also evaluating cost reductions and its model lineup.
Commodities & Forex
·The dollar index rose for a fourth straight week, with G-10 currencies broadly weaker. The yen extended losses as investors focused on Japan's Sunday election.
·Oil rose on Friday, with WTI up over 2%, as traders monitored risks of escalating Middle East conflict.
·Gold rose for a third straight week as U.S. data reinforced bets on orderly Fed rate cuts.
Earnings & Data Watch
·U.S. October Dallas Fed Manufacturing Index (prior: -9, forecast: -9)
·UK October CBI Retail Sales (prior: 4)
Author: Terry Chow
Proofreader: Penny Yang
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