Market drivers and catalysts
Equities: U.S. fell on regional-bank stress. Europe rose on staples and earnings. Asia mixed with Hong Kong softer into China’s plenum
Volatility: VIX surges on U.S. bank fraud fears; SPX pricing ±66pt move; sentiment fragile
Digital Assets: BTC and ETH dip; IBIT, ETHA see outflows; extreme fear grips market
Currencies: The Japanese yen and euro rallied versus a mixed US dollar, with USDJPY back below key 150.00
Commodities: Another phenomenal strong week in precious metals amid strong haven demand
Fixed Income: US treasuries rallied on weak risk sentiment, sending yields to new three year lows, in the case of the 2-year treasury benchmark
Macro events: Bank of England speakers
Macro headlines
US regional banking woes were reignited after Zions Bancorporation and West Alliance announced bad loans tied to fraud.
The White House is poised to ease tariffs on the US auto industry, delivering a major win for carmakers. The Commerce Department is expected to announce a five-year extension of an arrangement that allows manufacturers to reduce duties on imported parts, following months of lobbying by Ford and General Motors for relief from President Donald Trump’s tariffs.
USTR's Greer noted China's actions suggest a move towards decoupling, with the US focusing more on rare earths investment. China's Commerce Ministry urged the US to recognize past progress and address recent tensions, attributing them to US restrictions. MOFCOM assured approved civilian rare earth licenses and distinguished export controls from bans. China's Foreign Minister advocated against US decoupling, urging constructive dialogue to resolve issues.
Bank of Japan Governor Kazuo Ueda signalled further tightening is likely if confidence in the bank’s economic outlook improves. He will continue gathering information at international meetings and assess data ahead of the 29–30 October decision. Markets assign roughly a 17% chance of a hike this month.
US President Donald Trump said he plans a second meeting with Russia’s Vladimir Putin “within two weeks or so” to seek an end to the war in Ukraine. He voiced optimism about a ceasefire, saying “Alaska set the stage” and “we’ll be successful, save a lot of lives.” High-level staff talks will take place next week ahead of the summit, with the US delegation led by Secretary of State Marco Rubio.
Macro calendar highlights (times in GMT)
US Government data are impacted by shutdowns and are likely to be delayed
1600 – Bank of England’s Greene to speak
1630 – Bank of England’s Breeden to speak
Earnings events
Today: American Express, Reliance Industries, Volvo
Top 10 reporting next week (heart of earnings season begins next week): Tue: Netflix, GE Aerospace, Coca-cola; Wed: Tesla, SAP, IBM, Philip Morris; Thu: Amazon, T-Mobile; Fri: Procter & Gamble
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: S&P 500 −0.6%, Nasdaq 100 −0.5%, Dow −301 pts as regional banks dragged risk. Zions −13.0% after $50m in charge-offs stoked credit concerns, while Western Alliance −10.8% on a borrower-fraud suit, reviving bad-loan fears. Nvidia +1.1% held up semis after TSMC’s strong print and higher revenue outlook kept the AI demand tape intact. Focus turns to whether bank earnings and any tariff headlines temper volatility into next week.
Europe: STOXX 50 +0.8% and STOXX 600 +0.7% as food & beverage led after Nestlé said it will cut 12,000 jobs now and plan another 4,000 over two years, boosting sector sentiment. Sartorius jumped 7.5% on stronger sales and margin trends, while Nordea +3.5% to record highs on lending growth and a Norway deal; Whitbread −10.3% on weak results. FTSE 100 +0.1%. France’s CAC firmed after the new government survived no-confidence votes, easing political risk.
Asia: Hang Seng −0.1% to 25,888 as traders waited for the Oct 20–23 fourth plenum and next week’s Q3 GDP and retail sales. Tech and EVs lagged after Nio slumped as much as 13% on a lawsuit from Singapore’s GIC alleging inflated revenue, while SMIC −2.6% on chip-sector pressure. Insurers offered support, with China Life firmer on defensive rotation. The read-through: policy cadence and China data set the next leg for Hong Kong’s tape.
Volatility
Volatility surged Thursday as fears over U.S. regional banks reignited risk-off sentiment. The VIX jumped to 25.31, up 22.63%, while short-term indices like VIX1D and VIX9D rose over 39% and 34% respectively. News of fraudulent activity at Zions and Western Alliance triggered a sharp selloff in regional banks and spilled into broader equity markets. Investors scrambled for protection, with SPX option volume and VIX futures trading well above average.
Markets remain fragile heading into today’s Michigan sentiment survey and fresh earnings from major banks.
Implied daily SPX move: ±66 points (~1.0%). Any new bank headlines—positive or negative—could drive quick market repricing.
Digital Assets
Crypto markets remain under pressure amid rising fear across risk assets. Bitcoin dropped to $108,000, with ether slipping below $3,900, as investor sentiment soured further. Both IBIT and ETHA posted ETF outflows on Thursday, although ETHA’s were more modest. The broader risk-off tone is spilling into altcoins, with SOL and XRP also down, and crypto-linked stocks like RIOT and CIFR plunging over 10%. The Paxos $300 trillion minting mistake raised eyebrows but was swiftly reversed, reinforcing the transparency of blockchain systems.
Meanwhile, reports of the Trump family’s billion-dollar crypto empire and a high-profile White House fundraiser kept the political-crypto narrative in focus.
The crypto Fear & Greed Index is at 22 – flashing “extreme fear.” Despite some dip buying, confidence remains selective and fragile.
Fixed Income
Yesterday saw strong safe-haven flows into US Treasuries amidst the turmoil in US banking and private credit/private equity stocks, with the benchmark 2-year treasury yield dropping sharply yesterday and further overall some 10 basis points lower after the overnight session since Wednesday’s close, trading just below 3.4%, the lowest in over three years.
Similarly, the benchmark 10-year treasury yield fell below 4.00% for the first time since a brief episode below that level in April, trading 3.95% this morning in early European hours.
US high yield credit spreads rose sharply yesterday amidst risk off in the US regional banks and private equity and private credit stocks, with the Bloomberg measure of high yield credit spreads to US treasuries rising 10 basis points to 292 bps.
Commodities
The Bloomberg Commodity Index is heading for a weekly gain of more than 2% and its highest close in three years, lifting the year-to-date gain to 11.6%. The main driver has been another phenomenal week for precious metals, with silver jumping 13% and gold adding 10%. All other sectors except energy (−3.3%) also contributed to the positive outcome, with other strong performers including platinum group metals, coffee, cattle, corn, and wheat.
Gold and silver rose to records as fears about credit quality in the US economy and heightened frictions between Washington and Beijing strengthened demand for havens, with the latest extension being led by the COMEX futures contracts of silver, platinum, and palladium ahead of Sunday’s Section 232 deadline, with a potential—though unlikely—U.S. tariff announcement seen as a catalyst that could drive COMEX premiums sharply higher while tightening the London silver market further, as already imported metals into the U.S. risk being left stranded.
Oil is heading for a third weekly decline with Brent slumping towards USD 60 as investors focus on oversupply and the fallout from renewed US-China trade tensions.
Currencies
The US dollar was mixed, trading weaker versus the euro and a surging Japanese yen, while more steadily versus higher versus pro-cyclical currencies like the Australian dollar.
EURUSD rallied back above 1.1700 in continuing to reverse the recent slide, while the broadly stronger Japanese yen saw USDJPY testing below the key psychological 150.00 level overnight, trading 149.85 in late Tokyo hours today. AUDJPY tested its lows since early September, trading just below 97.00.
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