See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“It’s unbelievable how much you don’t know about the game you’ve been playing all your life.” – Mickey Mantle

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

The government remains shut down this morning as the stalemate between the two parties nears the start of its fourth week. As has been the case nearly the entire time, though, the markets seem indifferent as the S&P 500 will open today pretty much right where it was when the shutdown started. Interest rates are little changed this morning as the 10-year yield remains right at 4%. Crude oil is trading about 1% lower, right at $57 per barrel, and as has been the case for seemingly every day, gold prices are 1.5% higher, but still over 2% off record highs after Friday’s sharp reversal lower. Along with higher gold prices, crypto is also strong this morning with Bitcoin back above $110K and Ethereum back above $4,000. There’s not much economic data due to the shutdown, but the pace of earnings this week will really fill the void.

In Asia overnight, Japan surged more than 3% to new record highs after the LDP and Innovation Party agreed to form a coalition government, paving the way for Takaichi to become Prime Minister effective tomorrow. Elsewhere in the region, Chinese GDP rose more than expected, while Unemployment in Hong Kong rose more than expected.

Japan’s rally overnight pushed the index’s ‘marathon’ gain over the last 12 months to 26.2% in local currency terms, and interestingly enough, for all the fluctuations in global currencies this year, the dollar and yen haven’t moved much relative to each other, so on a dollar-adjusted basis, the Nikkei is up slightly less at 25.1%.

European markets aren’t as strong as Asia this morning, but they have a positive bias nonetheless. The STOXX 600 is up 0.6% to start the week. The CAC-40 is the only major benchmark not in the green as S&P lowered the country’s credit rating and an adverse legal ruling against BNP Paribas has that stock trading down over 5%.

Not only is Europe up less than Japan in early trading today, but the STOXX 600 is also lagging over the last year. As shown in the chart below, on a local-currency basis, Europe’s benchmark index is up a relatively modest 8.5% and trading just shy of new highs. After accounting for the weakness in the dollar this year relative to the dollar, though, it’s up nearly twice that at 16.3%. Depending on which side of the Atlantic you’re on, the performance of European stocks looks a lot different.

The weakness in the dollar against currencies like the euro has helped to drive the rally in gold, but in addition to being so strong lately, gold has also been volatile. Over the last 200 trading days, gold’s average daily move has been just under 1% which is the most volatility over a trailing 200-day period since Covid, but nowhere near historical extremes like we saw in the 1980s.

In the equity markets, volatility and large daily moves tend to occur during periods of market weakness, but for gold, that hasn’t necessarily been the case. In periods when gold has rallied 30%+ in 200 days, its average daily change was 1.27% whereas in all other periods, its average daily change was much less at just 0.76%.

See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“The main purpose of the stock market is to make fools of as many men as possible.” – Bernard Baruch

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Equity markets have seen volatility tick up as we enter the second half of October, which is very typical for this time of year.  US index futures were down more than 1% a few hours ago, but they’ve rallied back to the flat-line after President Trump made comments diffusing trade drama with China.

As shown below, key index ETFs remain within their long-term uptrends above their 50-day moving averages, with the exception of the S&P 500 Equal Weight.

While cap-weighted large-cap indices remain strong on the surface, a much higher percentage of stocks in the S&P are now oversold (43.2%) than overbought (21.4%).

See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“‘That didn’t work’ is cool, but ‘that won’t work’ is not a way to go through life.” – John Mayer

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

A triple play from Taiwan Semiconductor (TSM)—beating on earnings, revenue, and guidance—is lifting US equity futures, with technology stocks at the forefront. This rally is notably happening despite the President stating yesterday after the close that, “We are in one now,” in reference to a trade war with China. There are also signs that China’s aggressive stance on rare earth exports could be backfiring, as it has started to cause a more unified front between the US and other international partners.

Today was supposed to be a busy one for economic data, but the government shutdown put the kibosh on that, and the only report released was the Philly Fed Manufacturing report, which came in weaker than expected. The pace of earnings, however, remains active, and once again this morning, we’re seeing generally strong results.

Outside of equities, crude oil is fractionally higher but still well below $59 per barrel, the 10-year yield is trying to hang on to 4%, gold and other precious metals are rallying (what else is new), and crypto is also rallying after what has been a rough week for the sector.

It’s been a somewhat rocky week for US equities, although by the standards of October, it’s hard to get too worked up. After trading at an all-time high intraday last Thursday, the S&P 500 closed modestly lower on the day. That modest decline was followed on Friday by a sharp 2.7% decline in the S&P 500 as trade issues with China and concerns over corporate credit in the auto sector nudged investors to take some risk off the table. This week started on a positive note as the S&P 500 erased half of the losses from last Thursday and Friday, but intraday trading has been more volatile, and there’s been more of a tendency to sell rips than buy dips.

The skittishness showed up in investor sentiment this week as the weekly American Association of Individual Investors (AAII) survey showed that bullish sentiment dropped from 45.9% to 33.7% for the lowest reading in a month. The decline in bullish sentiment comes even as the S&P 500 closed within 2% of a record high yesterday. While bullish sentiment was routinely near 50% throughout 2024 as the market rallied, in the bounce off the April lows, investors have been much less willing to hop on the bandwagon.

Along with the modest weakness in US stocks over the past five trading sessions, global equities have also been under pressure. Of the US-traded ETFs tracking the stock markets of the seven G7 countries, all but France (EWQ) traded lower in the five trading days ended yesterday, and the US was stuck right in the middle with a decline of 1.2%. The biggest laggards have been Italy (EWI) and Germany (EWG) as their the only two below their 50-DMAs. Markets have certainly been on a tear this year as six of the seven ETFs listed have rallied at least 20% this year, but in the short run, they’ve mostly worked off their overbought conditions as France is the only country still in extended territory.