Treasury yields retreat, and equity markets rebound

US indices

US indices rose for the first time this week as the volatility index fell back from a four-month high and Treasury yields retreated. Asia Pacific (APAC) equity markets also rebounded.

Australian trade surplus

In Australia, the trade surplus increased to A$9.64 billion in August. It was above market forecasts of an A$8.72Bin gain, after a downwardly revised A$7.32Bin surplus the previous month. Shipments increased by 4% from the previous month, the first increase in three months, boosted by a rise in exports to China. Meanwhile, imports were down by 0.4%.

German trade surplus

In Germany, trade surplus unexpectedly rose in August to €16.6 billion from €15.9 billion the previous month, as imports fell 0.4% MoM.

US dollar

The USD dipped a little yesterday with the release of softer-than-expected Automatic Data Processing (ADP) data. Private businesses in the US created 89,000 jobs in September 2023, the least since January 2021, and well below market forecasts of 153K. Most of the job creation happened in the services sector. Leisure/hospitality, financial activities, and education and health services all added jobs, while losses were seen. professional and business services, trade, transportation and utilities, and manufacturing.

The T-dollar basket

On Thursday, initial jobless claims are expected to reach 210,000, up from 204,000 last week. The T-dollar basket dipped a little, but that was after setting a fresh 10 1/2-month high, a whisker away from the 107 mark. The real test for the dollar will come with non-farm payrolls on Friday. Expectations are for 170,000 job creations. The unemployment rate is expected to fall to 3.7% from 3.8% the previous month. Average hourly earnings are seen at 0.3% MoM and 4.3% on an annual basis.

Imperial Brands

Imperial Brands said it was on track to deliver full-year guidance and announced a further £1.1bn share buyback. Total capital returns in FY24, including ordinary dividends and share buybacks, are expected to exceed £2.4 billion.

Constellation Brands & Levi Strauss

Over in the US, the market awaits a few quarterly reports. Constellation Brands is scheduled to post Q2 earnings before the US opening bell. Earnings are forecast at $3.36 per share and revenue at $2.82 billion, both about 6% higher than the same quarter a year ago. Levi Strauss is poised to announce its fiscal Q3 earnings after the market closes. The market expects earnings. of 27 cents per share. That would be 13 cents lower than the same quarter a year ago. Revenue is expected to reach $1.54 billion, broadly unchanged from last year.

Exxon Mobil

Exxon Mobil intends to deliver a third-quarter operating profit between $8.3 billion and $11.4 billion, below the year's record earnings but up from its second quarter. It was after the market closed that the oil giant announced its forecasts, adding that its oil and gas production earnings were boosted by an about 30% increase in average crude oil prices during the period.

The Brent global benchmark ended the quarter near $97 per barrel, up from $72 per barrel at the end of June. Exon Mobil's full results are due to be released on October 27. Exxon shares fell 4.4% on Wednesday as oil prices tumbled, but that was after hitting a record high of $120 last week.

US crude oil stock

Last week, US crude oil stock piles fell to their lowest this year. Strong export demand sent crude inventories 2.2 million barrels lower. Crude exports climbed 944,000 barrels per day. In contrast, gasoline inventories rose much more than expected, by 6.5 million barrels, as demand was weak, according to the Energy Information Administration on Wednesday. Distillate stockpiles fell by 1.3 million barrels.

Yesterday the Organization of the Petroleum Exporting Countries (OPEC) decided to maintain existing supply cuts in place, 1 million bpd cut for Saudi Arabia, and 300,000 bpd cut for Russia, until the end of the year.