MHMarkets：October 16, 2023--Fundamental Reminder

20:30 USD NY Empire State Manufacturing Index (OCT)

22:30 Fed President Harker speaks on the economic outlook.

Market Overview

Review of Global Market Trend

On Friday, the escalation of conflict in the Middle East sparked risk aversion in the market, but with the dollar index already high and dovish signals from several Fed officials, it ended up only 0.16% at 106.68.

Treasury yields fell, with the 10-year yield falling more than 10 basis points at one point to 4.61% from 4.69% on the day, thanks to increased risk aversion. The yield on the two-year note fell almost 6 basis points during the day to close at 5.06%.

Spot gold jumped $50, its first one-day gain of more than 3% since the banking crisis began, and settled up 3.34% at $1,932.36 an ounce. Spot silver closed up 4% at $22.7 an ounce.

Crude oil rose more than $4 a barrel on the day, with WTI crude up 5.04% at $87.68 a barrel and Brent crude back above $90 a barrel, up 5.43% at $90.90.

U.S. stocks came under pressure, with the Dow Jones Industrial Average up 0.12%, the S&P 500 down 0.51% and the Nasdaq down 1.23%. Star tech stocks underperformed, with Nvidia closing down 3.15% and Tesla down 2.99%. Gold and silver closed strongly higher, while oil and gas stocks were higher throughout the day, with Marathon Oil up 4.76% and Conocophillips up 3.1%.

Major European stock indexes closed lower across the board, with Germany's DAX30 down 1.55%, Britain's FTSE 100 down 0.57% and the Euro Stoxx 50 down 1.50%.

Market Focus

1. The Israeli-Palestinian conflict has killed more than 4,100 people on both sides; Sources say the US and Israel are discussing Biden's potential visit to Israel; Iran's foreign minister meets Hamas leaders for the first time since the current round of Israeli-Palestinian conflict; Iran warns it will have to intervene if Israel continues operations in Gaza; Idf: The army can operate “anywhere in the Middle East” for Israel's security. Gaza's Rafah border crossing into Egypt opened at 9 a.m. local time; America has communicated with Iran through back channels; Blinken will visit Israel again on Monday.

2. Yellen: We have imposed numerous sanctions on Hamas and are constantly working to find ways to strengthen them.

3. Exit poll: Pro-European opposition wins majority in Poland's parliament.

4. President of the International Olympic Committee: The Olympic Committee is considering the creation of the Olympic e-Sports Games.

5. Media: South Korea's ruling party appointed leadership announced their collective resignation.

6. ECB Governing Council Nagel: Policy will remain tight for the foreseeable future.

7. New Zealand's opposition party has won the country's election, with Prime Minister Hipkins conceding defeat.

8. ECB Governing Council Kazmir: It could be a year before the ECB considers cutting interest rates.

9. Senior IMF Official: I don't see any current scenario for intervention in the yen, including market disorder, financial stability risks, and unanchoring of inflation expectations.

10, Iran's oil minister said he expects oil prices to hit $100 a barrel because of the situation in the Middle East.

11, France raised its security alert to the highest level.

Institutional Perspective

01

Morgan Stanley

【Morgan Stanley：Morgan Stanley believes the catalysts for further declines are in place】

Morgan Stanley's Mike Wilson thinks there will be a rebound in earnings in the second half of 2024, but for now his message to investors is: stick with the stockpicker's playbook, because things will get worse before they get better. Mr. Wilson said the stock market's downward trend after peaking in July will continue, and the catalysts are in place for further declines. His year-end target for the S&P 500 implies another roughly 10% decline in stocks from current levels. The famed stock short, who was ranked No. 1 in last year's institutional investor survey, correctly predicted a stock sell-off into 2022. “This boom-bust-boom process is underway,” Mr. Wilson said in a telephone interview. He expects earnings to remain under pressure over the next six to nine months as the US economy slows. His earnings per share forecast for the S&P 500 this year is $185, the lowest of any Wall Street analyst, while his forecast for 2024 is $228, predicting a 23% rebound.

02

ANZ Bank

【ANZ Bank：The key for the market is whether the conflict is contained or spreads to other regions】

“The key for markets will be whether the conflict is contained or whether it spreads to other regions, particularly Saudi Arabia,” ANZ analysts Brian Martin and Daniel Hynes said in a note. At least initially, it seems likely that the market will view the situation as still limited in scope, duration and oil price impact. But expect higher volatility.

03

Bloomberg

【Bloomberg：The risk of another rate hike is not negligible, and markets may be underestimating it.】

Anna Wong and Stuart Pau, Bloomberg Economics, said: “September's CPI report won't convince most Fed officials that rates are tight enough... ”Our benchmark is for the Fed to hold rates steady for the rest of the year, but we think the risk of another rate hike is non-negligible and the market may be underpricing this.