Stock Market Update

The S&P 500 futures currently trade 31 points below fair value. 

Asian markets finished lower on Wednesday, with the rebound in oil prices adding to inflation concerns and prompting profit-taking following recent gains. Japan's Nikkei 225 fell 0.9%, snapping a two-day winning streak after reaching a three-month high, with Disco (-6%), Kioxia (-5%), Fujikura (-3%), Tokyo Electron (-2%), and Advantest (-1%) leading technology losses. Japanese wage growth remained firm, with average cash earnings rising 3.8% yr/yr in August, slightly above expectations, while the Reuters Tankan Index improved to 22 in October from 21. Hong Kong's Hang Seng Index declined 0.6%, with Genscript Biotech (-13%), Z.AI (-3%), Wuxi Biologics (-2%), Tencent (-2%), and Xiaomi (-1%) among the laggards as the rebound in crude overshadowed another record-setting session on Wall Street. The Reserve Bank of India raised its policy rate by 25 bps to 5.50%, matching expectations, while maintaining the cash reserve ratio at 3.00%. China's Shanghai Composite remained closed for the National Day holiday and is scheduled to reopen Thursday.

• In economic data:
  • Japan's August average cash earnings increased 3.8% yr/yr (expected 3.7%; prior 4.3%), while overtime pay rose 5.2% yr/yr (prior 4.5%).
  • Japan's October Reuters Tankan Index increased to 22 from 21.
  • Japan's August Leading Index increased to 118.0 (expected 118.1; prior 117.7), while the Coincident Indicator fell 1.9% m/m (prior 1.7%).
  • Australia's August building approvals fell 6.1% m/m (expected -6.1%; prior -1.9%) and increased 10.3% yr/yr (expected 10.3%; prior 10.9%). Private house approvals rose 3.7% m/m (expected 3.7%; prior -1.9%).
  • The Reserve Bank of India raised its policy rate by 25 basis points to 5.50% (expected 5.50%; prior 5.25%) and maintained the cash reserve ratio at 3.00%.

European markets trade sharply lower, with Brent crude back above $100 per barrel amid renewed attacks on shipping in the Strait of Hormuz, adding to inflation and interest-rate concerns as investors await the Federal Reserve's meeting minutes. Germany's DAX falls 1.4%, potentially snapping a three-session winning streak despite industrial production rising a stronger-than-expected 2.0% m/m in August, with Infineon (-4%), Siemens Energy (-2%), Deutsche Bank (-1%), and Vonovia (-1%) among the laggards. France's CAC 40 declines 1.1% to its lowest level since March as concerns over the country's fiscal outlook compound the broader risk-off sentiment, while BNP Paribas (-1%), Crédit Agricole (-1%), and Société Générale (-2%) retreat. London's FTSE 100 loses 0.8%, with a stronger dollar and rising bond yields adding to the pressure, although Shell edges higher after indicating that its energy trading division performed strongly during the third quarter. Expectations for tighter monetary policy are also building, with U.K. swaps now pricing more than 100 bps of Bank of England rate increases by the end of next year. The broader STOXX Europe 600 falls 1.0%, while Italy's FTSE MIB (-2.0%) and Spain's IBEX 35 (-1.6%) underperform.

• In economic data:
  • Germany's August industrial production increased 2.0% m/m (expected 0.5%; prior -1.2%) and 2.33% yr/yr (prior -1.74%).
  • France's August trade deficit narrowed to EUR6.1 billion (expected EUR6.5 billion; prior EUR6.6 billion), while the current account deficit narrowed to EUR1.5 billion from EUR3.9 billion.
  • The U.K.'s September Lloyds House Price Index was unchanged m/m (expected 0.0%; prior -0.3%). The prior yr/yr reading was -0.4%.