Market drivers and catalysts
Equities: Banks and chips lifted the U.S.; Europe rallied on luxury after LVMH; Asia firmer on AI tailwinds and policy hopes
Volatility: VIX stable near 20.6. Curve inverted. Earnings, trade tensions, and Fed speakers in focus
Digital Assets: ETHA sees more outflows. IBIT attracts inflows. Altcoins mixed. Focus shifts to ETF flows and macro risks
Fixed Income: US treasury markets quiet. High yield corporate bond spreads dropped sharply yesterday.
Currencies: USD edges weaker. AUD weakens on unemployment rate jump
Commodities: Crude rises as India pledges to cut Russian imports; gold sets another record
Macro events: US Oct. NAHB Housing Market Index, US Oct. Philly Fed survey
Macro headlines
US Treasury Secretary Scott Bessent said he hopes that the US and China can work toward a longer term truce on trade before a Xi-Trump meeting theoretically set to take place in South Korea late this month ahead of the supposed November 1 deadline of the current pause in US tariffs. Bessent said that the US could back down for longer on raising tariffs again if China suspends its plans for rare earth export controls. Bloomberg separately reported that the G7 countries are planning a coordinated response to China’s rare earths policy.
Australia’s Unemployment rate unexpectedly jumped 0.2% to 4.5% in September from an 0.1% upwardly revised 4.3% rate in August, with some of that increase likely due to a rise in the participation rate, which was revised 0.1% higher in August and rose another 0.1% to 67.0% in September.
The NY Empire State Manufacturing Index rose 19.4 points to 10.7 in October 2025, exceeding expectations and indicating modest growth. New orders and shipments rebounded, while delivery times lengthened and supply availability worsened. Employment increased despite a shorter workweek, and costs and prices rose faster. Nearly half of firms are optimistic about near-term improvements.
Japan's core machinery orders dropped 0.9% month-over-month to ¥8890 billion in August 2025, improving from July's 4.6% fall but missing a forecasted 0.4% rise. Non-manufacturing orders fell 6.4%, and manufacturing orders slipped 2.4%. Sharp declines were seen in goods leasing, chemicals, pulp and paper, transport equipment, and other non-manufacturing sectors. Annually, private-sector orders rose 1.6%, below the expected 4.8%. These orders serve as a volatile leading indicator for capital expenditure over six to nine months.
Macro calendar highlights (times in GMT)
US Government data are impacted by shutdowns and are likely to be delayed
1230 – US Oct. Philadelphia Fed survey
1300 – US Fed’s Miran and Waller to speak
1400 – US Oct. NAHB Housing Market Index
1430 – EIAs Weekly Natural Gas Storage Change
Earnings this week
Today: TSMC, Charles Schwab, Interactive Brokers, ABB, CSX Corporation
Friday: American Express, Reliance Industries, Volvo
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: S&P 500 rose 0.4%, Nasdaq 100 gained 0.7%, and the Dow was flat as bank beats and a chip rebound offset tariff noise and a data-light tape under the shutdown. Morgan Stanley jumped 4.7% on record dealmaking, while Bank of America added 4.4% on stronger fee and NII trends. Insurance lagged as Progressive fell 5.8% on a profit miss, and healthcare slipped with Abbott down 2.4% on softer diagnostics. Semis firmed after ASML’s orders beat lifted AI demand gauges, while focus turns to TSMC’s print and the Fed’s Beige Book next.
Europe: STOXX 50 rose 1.0% and STOXX 600 gained 0.6%, with the CAC 40 up 2% as luxury ripped after LVMH’s Q3 beat. LVMH surged 12.2% with read-through to peers, while Kering advanced about 5%; tech stayed supported with ASML up 3.1%. The FTSE 100 slipped 0.3% as the U.K. lagged broader European strength. French political risk eased as PM Sébastien Lecornu moved to suspend pension reform until after 2027, and U.S. comments hinted at possible tariff-pause extensions, tempering headline risk.
Asia: Tone improved across the region into policy events. Nikkei 225 rose 1.8% as chip strength and a steadier yen aided sentiment, while Hang Seng added 1.8% to 25,911 with tech and consumer leading. SoftBank gained 5.1% alongside AI-linked names, and SenseTime rose 5.0% on AI partnership news; Xuanzhu Biopharma popped 167% on debut. Hopes for a China consumption tilt at upcoming meetings and ASML’s orders beat underpinned the AI supply chain as investors awaited TSMC’s results later today.
Volatility
Volatility remains elevated after recent macro shocks. The VIX closed at 20.64 (-0.82%) on Wednesday, with the VVIX above 120, highlighting strong demand for hedging via VIX options. Importantly, yesterday, the VIX futures curve inverted, a classic sign of short-term stress, even as the S&P 500 gained modestly. This inversion suggests investors remain cautious amid the ongoing U.S.-China trade tensions and sensitivity to earnings and geopolitical headlines. While broader equity volatility has cooled slightly since last week’s spike, markets remain reactive. The Philadelphia Fed Manufacturing Index is confirmed for release today and may stir fresh moves.
Expected move (SPX today): ±48–49 points (~0.73%), per options pricing.
Digital Assets
Crypto markets continue to digest recent shocks. Bitcoin hovers around $111k, up slightly but still on edge after last week’s flash crash and $16B in liquidations. ETH holds near $4.0k, with ETF flows offering mixed signals: IBIT sees mild inflows (+0.16%) while ETHA suffers another large outflow (-2.29%). Broadly, investor focus is shifting from short-term price swings to fund flows, which remain the clearest signal of institutional appetite.
- Meanwhile, altcoins trade mixed—SOL flat, XRP marginally higher. Notably, crypto sentiment is still in “fear” territory, with macro tensions and DOJ actions weighing on confidence.
Fixed Income
US Treasuries saw a quiet session yesterday, with slight weakness seeing yield shying away from recent lows.
European sovereign bonds rallied strongly again yesterday, with French OATs still the center of attention ahead of a confidence vote on the newly minted Lecornu-led government, with the Socialist Party pre-declaring that it will not vote against the government after president Macron suspended pension reforms. The Germany-France sovereign 10-year yield spread dropped a couple of basis points yesterday to 77 basis points, the lowest in several weeks.
US high yield credit spreads dropped sharply yesterday, with the Bloomberg measure of high yield credit spreads to US treasuries dropping 16 basis points to 282 bps.
Commodities
Oil rose from a five‑month low after Trump said Indian Prime Minister Modi pledged to halt purchases of Russian crude, potentially reducing the current focus on an incoming supply glut amid OPEC+ production hikes. So far, the rebound has been limited with Brent trading around 62.5, below key resistance in the 64 area.
Gold rose to a fresh record at USD 4,242 as intensifying US–China tensions, an extended US government shutdown highlighting a politically dysfunctional Washington, and expectations of further Fed easing through year‑end supported demand.
Silver rose traded above $53 before drifting lower ahead of the European session. Expect big daily price swings to continue until tightness in London cash market starts to ease.
Currencies
The US dollar was slightly weaker, with EURUSD back above 1.1650 for the first time in a week, while USDJPY bounced slightly from local lows near 150.50 overnight as traders eye the key 150.00 level there.
The Australian dollar weakened on the unexpectedly strong rise in the Australian unemployment rate in September, with the rate now at a high since late 2021. AUDNZD dipped to a new local low below 1.1300 at one point overnight before finding support.
