Early Morning Call: USD at 2-month low ahead of mid-term election results, CPI

Forex

US indices ended yesterday's session higher. The currency market is, meanwhile, little changed this morning as markets await US mid-term elections results.

The US dollar fell to a near two-month low yesterday afternoon as the US Redbook index rose at its slowest pace since March 2021. The Redbook is a weekly index that measures same-store sales growth.

Yesterday it rose by 7.6% during the first week of November, following a 9.7% increase the previous week. That fall of the greenback sent gold above $1,700 for the first time since October 7.

Equity market overview

Overnight, equity markets were mixed in the Asia-Pacific region.

Mainland indices in Hong Kong and China underperformed as China's consumer price index (CPI) rose by 2.1% in October year-on-year (YoY), after 2.8% in September, and missing market expectations of 2.4%.

Producer price index (PPI) fell 1.3% YoY, reversing from a 0.9% gain a month earlier. That number reflects a fall in commodity prices, against sharply higher levels a year ago. A drop of 1.5% YoY was expected.

In the UK, the FTSE 100 opens today’s session lower. Marks & Spencer posted a profit before tax of £205.5 million, to be compared with £269.4m a year ago. The British retailer reiterated its full-year (FY) forecast.

ITV says in its trading update for the third quarter (Q3) that total revenue rose by 6%. ITV studio revenue increased by 16%, growing ahead of the market.

Taylor Wimpey says that the cancellation rate for the second half of the year to date is 24%, with a year-to-date cancellation rate of 18%.

Elsewhere in Europe, Commerzbank this morning posted a net profit of €195m in the third quarter, down 52%. This is, however ,higher than the €116m expected by analysts.

Ahold Delhaize posted better-than-expected earnings for the third quarter and raised its annual outlook for the second time this year.

And Adidas reported a net income from continuing operations of €66m in the third quarter. The group now expects net income of around €250m, taking into account the end of its partnership with Kanye West.

Yesterday evening, Walt Disney shares fell 6% in after-hours trading, after earnings and revenue fell short of expectations. The group posted earnings of 30 cents per chare, missing consensus of 59 cents. Revenue came at $20.15 billion, lower than the $21.38bn anticipated by analysts.

Disney, however, saw strong streaming growth for its Disney+ platform. Disney+ total subscriptions were 164.2 million versus 160.45 million expected.

Disney CEO, Bob Chapek, also said in the earnings release that Disney+ will achieve profitability in fiscal 2024. The direct-to-consumer division lost $1.47 billion during the most recent quarter. It also reported a 10% drop in domestic average revenue per user (ARPU) to $6.10.

Commodities

Oil prices dropped yesterday afternoon, after the EIA released its 2023 demand growth forecast. It now expects an increase of 1.16 million barrels per day increase YoY, that is 320,000 barrels lower than its previous estimate.

The latest API report shows that crude oil inventories rose by 5.6 million barrels last week. Gasoline stocks also rose by 2.6 million barrels while distillates stocks fell by 1.8 million barrels.