Markets keep eye on China US trade disputes

Market focus remains on headlines with the US government shutdown preventing the release of key data points. Treasury Secretary Scott Bessent suggested the US could come to a longer-term trade deal with China if the country rolled back its restrictions on critical minerals exports while the US Trade Representative Jamieson Greer assumed that the China wouldn’t implement its planned restrictions.

The Turkish central bank is reportedly considering plans to add new members to its monetary policy committee ahead of the retirement of deputy governor Cevdet Akcay next April. There are currently two vacancies on the seven-member MPC.

Saudi Arabia plans to develop a 12mn square metre mixed use project in Makkah. The King Salman Gate project will include residential, hospitality, commercial and cultural venues. The project will be backed by the Public Investment Fund.

Today’s Economic Data and Events

10:00 UK monthly GDP Aug: forecast 0.1%

11:00 TU home sales y/y Sept

Fixed Income

• US Treasuries were moderately weaker overnight with the 2yr UST yield up less than 2bps at 3.4973% while the 10yr yield was near unchanged at 4.0282%. Market pricing for both the October and December FOMC meetings is for a 96-97% chance of a cut.
• MAF priced a USD 500m 10yr sukuk at T+95, tighter than initial guidance. Books were reportedly more than USD 1.75bn.

FX

• The US dollar was weaker overnight with losses against all peers. EURUSD ticked up 0.3% to 1.1647 while USDJPY was lower by 0.5% at 151.05. GBPUSD managed a gain of 0.6% at 1.3403 while CHF strengthened by 0.5% to 0.7967.
• In emerging market currencies USDTRY was stable at 41.8421 while INR strengthened by 0.8% to close at 88.0675. EGP was near flat at 47.65.

Equities

• US equity markets had a more muted but positive session with the Dow Jones up 0.4% and the NASDAQ rising almost 0.7%. The Dow Jones, however, closed near flat with a negative bias. In Europe, the Euro Stoxx index was higher by almost 1% while the FTSE dropped 0.3%.
• Local markets had a moderately positive close. The DFM added 0.1% while the ADX 15 gained 0.2%. In Saudi Arabia, the Tadawul had a stronger close, up 0.7%.

Commodities

• Oil markets pulled lower again overnight wit ha 0.8% drop in Brent futures to UDS 61.91/b and WTI off by 0.7% at USD 58.27/b. The API reported a build in US crude stocks of 7.4m bbl last week along with gains in gasoline stockpiles.
• Gold continues to march to new highs, closing above USD 4,200/troy oz overnight and extending gains in trade today. Silver stretched further with a 3% rise to USD 53.03/troy oz while both platinum and palladium were higher. Industrial metals were higher across the board.