Q3 financial earnings have boosted market sentiment

　　

U.S. equities rallied on the first trading day of the week. The Dow Jones Industrial Average gained 1.86% to close at 30185.82. The S&P 500 jumped 2.65% to close at 3677.95. The tech-heavy Nasdaq Composite soared 3.43% to close at 10675.8. Equities rallied as Q3 earnings from the financial sector have boosted investing sentiment. Bank of America reported better-than-expected results, sending the stock up 6%. As previously mentioned, Q3 earnings are not expected to reflect the full effect of the two consecutive 75 basis point hikes by the Fed; instead, earnings will begin to slow as Q4 heads around the corner.

Netflix, Tesla, and IBM are scheduled to release earnings later this week.

Monday’s equity rally was also aided by political developments in Britain. Prime Minister Truss has replaced Finance Minister Kwasi Kwarteng with Jeremy Hunt, who has announced that almost all planned tax cuts would be scrapped. The reversal in fiscal spending has also backed the British Pound as Gilts rallied.

Main Pairs Movement

The Dollar Index dropped 1.09% over the previous trading day. The U.S. Greenback lost bidding as market participants rotated into a red-hot equities market. The benchmark U.S. 10-year treasury yield continues to hover around 4% and was last seen trading at 3.998%.

EURUSD rose 1.22% over the previous trading day. The Euro took full advantage of the weaker Dollar and reached its highest level in over a week. On the economic docket, Germany’s economic sentiment is set to release during today’s European trading session.

GBPUSD gained 1.53% throughout yesterday’s trading. The British Pound found support as the reversal of the “mini-budget” fiscal plan has eased some concerns; however, the economic outlook for Britain remains bleak as the nation combats soaring inflation and soaring energy costs.

Gold rebounded 0.38% throughout yesterday’s trading. The non-yielding metal found some breathing room amid a weaker Dollar.

Economic Data

Currency	Data	Time (GMT + 8)	Forecast
NZD	CPI (QoQ) (Q3)	05:45	1.6%
AUD	RBA Meeting Minutes	08:30
CNY	GDP (YoY) (Q3)	10:00	3.4%
EUR	German ZEW Economic Sentiment (Oct)	17:00	-65.7