US stocks rebounded amid stronger-than-expected ADP and ISM Services data - Newsquawk Asia-Pac Market Open

• US stocks ended the day with notable gains after a downbeat start as initial AMD weakness post-earnings weighed with investors touting lofty valuations, but this soon pared. Sectors were mainly green with Communication Services and Consumer Discretionary sitting atop of the pile, with Consumer Staples, Tech, and Real Estate sitting in the red, albeit marginally. US data came via ADP and ISM Services, both of which came in hotter than anticipated, with both garnering a Dollar bid and pressuring on USTs.
• USD was choppy and took a pause following a five-day rally. There was brief support seen after ADP jobs data topped forecasts and printed the first positive reading since July, while ISM Services data was hot, in which the headline surpassed estimates, and Prices Paid hit a three-year high with respondents continuing to cite tariff impacts. However, the greenback failed to sustain the brief support and pulled back from intraday highs to return to flat territory.
• Looking ahead, highlights include Japanese Labour Cash Earnings, Services & Composite PMIs, Australian Trade Data, Indian Services & Composite PMIs.

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LOOKING AHEAD

• Highlights include Japanese Labour Cash Earnings, Services & Composite PMIs, Australian Trade Data, Indian Services & Composite PMIs.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks ended the day with notable gains after a downbeat start as initial AMD weakness post-earnings weighed with investors touting lofty valuations, but this soon pared. Sectors were mainly green with Communication Services and Consumer Discretionary sitting atop of the pile, with Consumer Staples, Tech, and Real Estate sitting in the red, albeit marginally. US data came via ADP and ISM Services, both of which came in hotter than anticipated, with both garnering a Dollar bid and pressuring on USTs.
• SPX +0.37% at 6,796, NDX +0.72% at 25,620, DJI +0.48% at 47,311, RUT +1.54% at 2,465.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump's case for tariffs looked in trouble after the first hour of argument, after justices expressed scepticism of his claim that a 1977 economic emergency law grants the president power to impose tariffs unilaterally, according to WSJ.
• US President Trump reiterated that Chinese President Xi is a good friend.
• China’s Commerce Ministry suspended the unreliable entity list announced in April, while it removed the entity list announced in March and will adjust the list. Furthermore, China’s Commerce Minister ended measures on some US optical fibre products.
• Chinese senior negotiator met with the US agriculture trade delegation and highlighted that the two countries are important agricultural trade partners.
• Canadian PM Carney said US-Canada talks have not resumed.
• French government initiated the process to suspend Shein.

NOTABLE HEADLINES

• Fed Governor Miran said ADP data was a welcome surprise and job market trends pre-government shutdown appear still in place, while job market data indicates interest rates could be lower than current levels, according to Yahoo Finance.
• US President Trump said regarding the US shutdown, that it was a big factor in elections, while he does not think Democrats will act soon on the shutdown, and does not think it will be sorted soon. Trump reiterated the call to kill the filibuster and reopen the government immediately.
• US Senate Minority Leader Schumer and House Minority Leader are seeking a meeting to end the government shutdown.
• US Quarterly Refunding Announcement (QRA) noted it expects to keep coupon and FRN auction sizes steady for the next several quarters, while it began to preliminarily consider future auction size increases. US is offering USD 125bln (prev. 125bln) of Treasury securities to refund around USD 98.2bln (prev. 89.8bln) of privately-held Treasury notes and will raise new cash of USD 26.8bln (prev. 35.2bln).

DATA RECAP

• US S&P Global Services PMI Final (Oct) 54.8 (Prev. 55.2)
• US S&P Global Composite PMI Final (Oct) 54.6 (Prev. 54.8)
• US ISM N-Mfg PMI (Oct) 52.4 vs. Exp. 50.8 (Prev. 50.0)
• US ISM N-Mfg Price Paid Idx (Oct) 70.0 (Prev. 69.4)
• US ISM N-Mfg New Orders Idx (Oct) 56.2 (Prev. 50.4)
• US ISM N-Mfg Employment Idx (Oct) 48.2 (Prev. 47.2)
• US ADP National Employment (Oct) 42.0k vs. Exp. 28.0k (Prev. -32.0k, Rev. -29k.0)

FX

• USD was choppy and took a pause following a five-day rally. There was brief support seen after ADP jobs data topped forecasts and printed the first positive reading since July, while ISM Services data was hot, in which the headline surpassed estimates, and Prices Paid hit a three-year high with respondents continuing to cite tariff impacts. However, the greenback failed to sustain the brief support and pulled back from intraday highs to return to flat territory.
• EUR eked marginal gains but with upside capped by resistance near the 1.1500 level and following soft PPI data from the EU.
• GBP rebounded from recent losses following stronger-than-expected Services PMI data from the UK, and with a report noting that Chancellor Reeves is set to spare UK banks from the budget tax raid.
• JPY faded its recent gains with USD/JPY returning to 154.00 territory following the improvement in risk sentiment, while participants now look ahead to the latest Labour Cash Earnings data from Japan due overnight.
• Riksbank maintained its rate at 1.75% as expected, while it reiterated that the policy rate is expected to remain at this level for some time to come. Furthermore, it stated the labour market is still showing weak development, although there are now some signs that a turnaround is on its way.

FIXED INCOME

• T-notes were sold after ADP and ISM Services data beat expectations, while the US Treasury began preliminary discussions on boosting auction sizes.

COMMODITIES

• Oil prices swung from gains to losses in a choppy day of trade amid a lack of oil-specific newsflow and with a larger-than-expected build in crude stockpiles.
• US EIA Weekly Crude Stocks w/e 5.202M vs. Exp. 0.603M (Prev. -6.858M)
• Poland is in talks to import more US LNG to supply Ukraine and Slovakia, according to Reuters citing sources familiar with negotiations.

GEOPOLITICAL

MIDDLE EAST

• IDF and Israel's Air Force are ready to put all of Israel's offensive capabilities in the face of Hezbollah, although the Israeli Army said Hezbollah has not yet reached the point where it is forced to launch an operation of this kind, according to Sky News Arabia.
• Turkey’s intelligence chief and Hamas delegations discussed steps to overcome ceasefire process problems, according to Reuters citing security sources.
• Chinese Foreign Minister Wang held a phone call with his Iranian counterpart and exchanged views on Iranian nuclear issues, while he said China supports Iran's right to peaceful use of nuclear energy.

RUSSIA-UKRAINE

• US informed Russia of a Minuteman missile launch.
• US President Trump said they will be working on a plan with China and Russia to denuclearise.
• Russian President Putin said regarding US President Trump's previous statement about testing nuclear weapons, that it is a serious issue and Russia always sticks to its obligation on nuclear test bans, while he added if others hold such tests, Russia should respond accordingly. It was also reported that Russian President Putin ordered the Foreign Ministry and special services to prepare coordinated proposals on the expediency of starting work to prepare for nuclear tests.
  - Russian Defence Minister said "we will be directed by the actions of the US, and the US is building up strategic weapons", while he added that the US could destroy global strategic safety if it abandons the nuclear tests memorandum. Furthermore, he said it is necessary to immediately begin preparations for nuclear tests and that the US plans underground nuclear tests.
• Russia’s Kremlin said it hopes that the situation surrounding statements about the possibility of nuclear tests will not affect US-Russia relations, according to Interfax.

OTHER

• Belgium's Defence Minister said the National Security Council will discuss activating Article 4 of the NATO Charter, after monitoring drones over airports in the country, according to Al Jazeera.

ASIA-PAC

NOTABLE HEADLINES

• Japan's top currency diplomat Mimura said recent JPY moves deviate from fundamentals, while JPY long positions have been shrinking after the summer. Mimura also noted they are a bit worried whether or not the current situation in the stock market might be a little too rapid.
• RBNZ Governor Hawkesby said he doesn’t think they are out of the worst on global trade tensions, while he added the labour market has deteriorated, which is something they anticipated.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Reeves is set to spare UK banks from the budget tax raid, according to FT.
• ECB's Nagel said the ECB should be vigilant but not complacent on inflation.
• ECB's Villeroy said the ECB is not in a 'fixed' position and will need full optionality.

DATA RECAP

• UK S&P Global Services PMI (Oct) 52.3 vs. Exp. 51.1 (Prev. 51.1)
• UK S&P Global Composite PMI (Oct) 52.2 vs. Exp. 51.1 (Prev. 51.1)
• German HCOB Services Final PMI (Oct) 54.6 vs. Exp. 54.5 (Prev. 54.5)
• German HCOB Composite Final PMI (Oct) 53.9 vs. Exp. 53.8 (Prev. 53.8)
• French HCOB Services Final PMI (Oct) 48.0 vs. Exp. 47.1 (Prev. 47.1)
• French HCOB Composite Final PMI (Oct) 47.7 vs. Exp. 46.8 (Prev. 46.8)
• Italian HCOB Services Final PMI (Oct) 54.0 vs. Exp. 53.0 (Prev. 52.5)
• Italian HCOB Composite Final PMI (Oct) 53.1 (Prev. 51.7)
• EU HCOB Services Final PMI (Oct) 53.0 vs. Exp. 52.6 (Prev. 52.6)
• EU HCOB Composite Final PMI (Oct) 52.5 vs. Exp. 52.2 (Prev. 52.2)
• EU Producer Prices MM (Sep) -0.1% (Prev. -0.3%, Rev. -0.4%)
• EU Producer Prices YY (Sep) -0.2% vs. Exp. -0.1% (Prev. -0.6%)